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THE   LAW 


OF- 


MUNICIPAL    BONDS, 


INCLUDING  A 


DIGEST  OF  STATUTORY  LAWS  RELATING  TO 
THEIR  ISSUE 


TO  WHICH  IS  ADDED  A 


DIGEST  OF  THE  STATUTORY  LAWS  GOVERNING  THE  INVEST- 
MENT OF  CORPORATE  AND  TRUST  FUNDS, 


SAVINGS  BANKS,  INSURANCE  COMPANIES,  GUARDIANS, 

EXECUTORS,  AND  OTHER  CORPORATIONS 

AND  TRUSTEES. 


BY    J.     A.  tBURHANS, 

OF  THE   CHICAGO    BAR. 


THIS  EDITION  ALSO  INCLUDES 

THE  PUBLISHERS' 
BOND  VALUES    AND    INTEREST  TABLES. 


PREPARED  FOR  AND  PUBLISHED  BY 

S.   A.    KE  AN   &   CO., 
BANKERS, 

CHICAGO  AND  NEW   YORK. 
1889. 


COPYRIGHT  1889, 
BY  3.  A.  KEAN  &  CO. 


PRESS  OF  THE  W.  t.   P.  A. 


PREFACE. 

A  Digest  of  the  Municipal  Bond  laws  of  ten  of  the  West- 
ern states  was  published  by  S.  A.  Kean  &  Co.  several  years 
ago.  So  many  commendatory  letters  were  received  from  bank- 
ers and  others  interested  as  investors,  or  otherwise,  in  this  class 
of  public  securities,  that  the  publishers  decided  on  the  publi- 
cation of  a  new  and  more  complete  work  on  the  same  subject. 
Much  more  time  and  labor  has  been  required  in  its  preparation 
than  was  originally  anticipated  or  intended.  The  scope  of  the 
work  has  been  extended,  and,  as  a  valuable  complement,  three 
additional  chapters  have  been  added,  embracing  a  digest  of  the 
statutory  laws  of  the  New  England,  Eastern  and  other  older 
States,  relating  to  investments  by  savings  banks,  insurance 
companies,  and  of  other  trust  and  corporate  funds.  The  first 
six  chapters  will  be  found  to  contain  a  statement  of  the  more 
important  legal  principles  governing  the  law  of  municipal 
bonds,  with  a  review  of  the  latest  decisions  of  the  highest 
courts.  Special  attention  has  been  given  to  those  questions 
which,  from  long  experience  in  the  handling  and  legal  exam- 
ination of  these  municipal  securities,  the  publishers  and  editor 
have  found  important  and  liable  to  arise.  Much  care  has  been 
taken  to  make  the  work  reliable  and  correct,  and  the  fact  that 
its  preparation  has  required  the  examination  and  digesting  of 
over  one  hundred  and  fifty  volumes  of  statutes  and  session 
laws,  the  work  being  done  during  such  times  as  it  was  possible 
to  take  from  the  pressing  demands  of  an  active  practice,  must 
explain  any  errors  that  may  have  escaped  revision.  The  work 
makes  no  pretensions  as  a  text-book,  but  is  rather  intended  as, 
what  we  are  assured  it  will  be  found  to  be,  a  valuable  hand- 
book for  all  those  issuing,  handling,  investing,  or  interested 
in  the  public  securities  of  which  it  treats. 

CHICAGO,  January  i,  1889.  J.  A.  B. 


CONTENTS. 

(For  General  Index,  seepages  331-312.) 

CHAPTER  I. —            Introduction — Law  of  Municipal  Bonds  .    .  1-4 

"          II.—          Power  to  issue  Municipal  Bonds 5-18 

III. —         Purposes  for  which  Bonds  may  be  issued  .    .  19-27 

IV. —        Constitutional  Limitations  and  Provisions   .  28-42 

V. —          The  Issue  of  Municipal  Bonds 43-52 

"         VI. —        Rights  and  Remedies  of  Bond  Holders  .    .    .  53-60 


VII. —      Digest  of  Bond  Laws  of  Ohio 62-75 

VIII. —                                     "      "  Indiana 76-90 

IX. —                                        "      "  Illinois 91-109 

X. —               "       "      "          "      "  Michigan 110-117 

XI. —             "       "      "  "      "  Wisconsin      ....  118-126 

XII. —  "      "  Minnesota      ....  127-135 

XIII. —                                     "      "  Iowa 136-154 

XIV. —                                     "      "  Nebraska I55-I79 

XV. —                                       "      "  Missouri 180-193 

XVI. —                                   ''      "  Kansas 194-221 

XVII. —        "       "                  "      "  Arkansas 222-225 

XVIIL—      "       "      "          "      "  Texas 226-231 

XIX.—         "       "      "          "      "  Colorado 232-238 

XX. —  "      "  Nevada,  Oregon  and 

California 239-246 

XXI. —  Digest  of  Bond  Laws  of  Dakota 247-263 

XXII.—      "       "      "         "      "  Territories 264-284 


XXIII — Investments  by  Savings  Banks 286-305 

XXIV.--          "  "  Insurance  Companies   .    .    .    306-320 

XXV.—  "  "  Guardians,  Executors,  Trust- 

ees, Trust  Companies,  etc  .    .    321-327 


Suggestions  as  to  Issue  of  Bonds  by  Municipalities    ....    328-330 


General  Index 331-342 


CHAPTER  I. 


LAW  OF  MUNICIPAL  BONDS. 

1 .  Municipal  Bonds: — Municipal  bonds  may  be  defined  as 
evidences  of  indebtedness  issued  by  or  in  behalf  of  public  or 
municipal  corporations,  negotiable  in  form,  payable  at  some 
future  time,  transferable  by  indorsement  or  delivery,  usually 
under  seal,  and  bearing  interest  payable  annually  or  semi-annu- 
ally,with  interest  notes  or  coupons  attached.     They  are  issued 
by  counties,  cities,  towns  and  other  municipalities  for  the  pur- 
pose of  raising  money  for  some  public  or  authorized  purpose. 
They  are  held  largely  by  the  municipalities  themselves  for 
sinking  fund  purposes;  by  insurance  companies;  trust  compa- 
nies;  savings  banks,  and  other  public  and  private  investors 
both  in  this  and  foreign  countries.     The  bonded  indebtedness 
of  the  states  and  territories,and  theirsubdivisions,  as  shown  by 
the  federal  census  of  1880,  exceeded  eleven  hundred  millions 
of  dollars,  and  it  may  be  fairly  estimated  that  the  present 
amount  of  municipal  bonds  outstanding  in  the  United  States 
will  reach  fifteen  hundred  millions. 

2.  Law  of  Municipal  Bonds — Importance: — The  law  of 
municipal  bonds  is  of  comparatively  recent  growth.     Nearly 
all  of  the  legislation  and  substantially  all  of  the  decisions  of 
any  importance  relating  to  this  class  of  public  securities  have 
been  made  within  the  past  fifty  years.     With  the  growing  ac- 
cumulation of  capital  demanding  safe  means  for  interest-bear- 
ing investments,  and  the  gradual  withdrawal  of  government 
bonds,  which  for  the  last  quarter  of  a  century  have  largely  sup- 
plied that  demand,  the  importance  of  municipal  bonds  is  be- 
coming more  and  more  to  be  recognized  in  the  monetary  world. 
With  the  increased  constitutional  and  statutory  restrictions 
thrown  around  their  issue;  with  the  law  relating  to  their  issue 

(0 


2  LAW   OF    MUNICIPAL    BONDS. 

and  status  becoming  more  clearly  defined  and  settled,  the  qual- 
ity and  value  of  this  class  of  public  securities  has  been  greatly 
improved  during  the  last  score  of  years.  They  are  usually 
issued  to  pay  for  public  improvements,  the  making  of  which 
tends  to  greatly  enhance  the  value  of  the  property  within  the 
corporation  to  be  taxed  for  their  payment. 

3.  Development  of  the  Law: — The  history  of  the  devel- 
opment of  the  law  of  municipal  bonds  is  one  of  no  little  interest 
to  the  political  economist.     During  the  years  following  the  war, 
many  municipalities,  especially  in  some  of  the  western  states 
and  territories,  became  careless  and  extravagant  in  the  issue  of 
bonds  for  all  sorts  of  authorized,  and  occasionally  unauthor- 
ized, purposes.     They  were  frequently  voted  with  little  or  no 
restriction,  in  aid  of  all  sorts  of  railroad  schemes,  in  many 
cases  for  railroads  never  built,   and  in  some  cases  apparently 
never  intended  to  be  built.     Instances  might  be  given  where 
bonds  were  issued  to  an  amount  greater  than  the  assessed  value 
of  all  the  taxable  property  within  the  municipal  or  territorial 
subdivision  issuing  them.     To  such  an  extent  was  this  con- 
tracting of  debts  for  posterity  to  pay  carried  on,  as  to  fairly 
justify  the  severest  censure  of  our  highest  courts.     Munici- 
palities found  themselves  the  victims  of  scheming  speculators; 
in  more  than  one  instance  bankrupted,  without  any  compensat- 
ing benefit. 

4.  It  is  not  strange  that  when  the  reaction  came,  the 
improvement  frequently  not  having  been  made,  and  payment 
was  required  for  the  indebtedness,  that  attempts  were  made 
through  the  courts  to  repudiate  the  bonds  thus  obtained,  nor 
that  the  state  courts  in  some  instances  have  been  ready  to 
sustain  these  attempts  wherever  possible.     It  will,  however,  be 
found  that  these  cases  of  extravagance  and  resulting  litigation 
have  usually  been  in  the  issue  of  bonds  in  aid  of  railroads  or 
internal  improvements  which,  while  they  are  now  recognized 
as  legitimate,  are  not  strictly  corporate  purposes.     An  exami- 
nation of  a  large  number  of  decisions  during  the  past  twenty- 
five  years  will  disclose  the  fact  that  in  at  least  nine  cases  out  of 


LAW   OF   MUNICIPAL    BONDS.  3 

ten  where  litigation  has  arisen  in  regard  to  the  payment  of 
this  class  of  securities,  the  bonds  had  been  issued  in  aid  of 
railways  or  for  purposes  of  questionable  legitimacy. 

5.  Position  of  the  U.  S.  Supreme  Court: — It  is  especially  to 
the  Supreme  Court  of  the  United  States  that  is  due  the  present 
importance,  stability  and  value  of  the  municipal  bond  as  an 
investment  security.     That  court,  in  a  long  line  of  decisions, 
has  sustained  the  rights  of  the  holders  of  this  class  of  securities, 
and  prevented  repeated  attempts  of  municipalities  to  avoid 
paying  their   bonded   obligations  when  legally  issued.     The 
result  has  been  favorable  in  inducing  a  higher  grade  of  munic- 
ipal honor,  greater  economy,  and  increased  constitutional  and 
statutory    restrictions    in   the   incurring   of    indebtedness   by 
municipalities,  and  thus  giving  an  advanced  and  more  fixed 
value  to  such  securities  in  the  monetary  markets,   and  estab- 
lishing public  confidence  therein.      Judge  Dillon,  when  com- 
menting upon  this  subject  in  1876,  said,  "The  Supreme  Court 
of  the  United  States  has  upheld  the  rights  of  the  holders  of 
municipal  securities  with  a  strong  hand,  and  has  set  a  face  of 
flint  against  repudiation,  even  when  made  on  legal  grounds 
deemed  solid  by  the  state  courts,  by  municipalities  which  had 
been  deceived  and  defrauded."       The  present  value  of  such 
securities   "is  largely  due  to  the  course  of  adjudication  in 
respect  thereto  by  the  Supreme  Court,  and  the  reliance  which 
is  felt  by  the  public  that  it  will  stand  firmly  by  the  doctrines 
it  has  so  frequently  asserted."1 

6.  Bona  Fide  Holder : — When  a  municipal  corporation  is 
authorized  to  issue  negotiable  bonds,  and  such  bonds  are  issued 
for  public  or  corporate  purposes,  it  will  be  found  extremely 
rare  that  their  validity  is  questioned  after  they  have  reached 
the  hands  of  a  bona  fide  holder.     Such  a  holder  is  one  who  has 
purchased  in  good  faith  the  bond  before  maturity,  for  value, 
without  notice  or  knowledge  of  any  defect,  or  of  any  of  the 
equities  between  the  original  parties.     It  may  be  stated  as  a 
general  rule  that  he  is  affected  only  by  the  want  of  power  in 

1  Dillon  Municipal  Bonds  (1876)  p.  7. 


4  LAW    OF   MUNICIPAL   BONDS. 

the  municipality  to  issue  the  bonds.  As  the  purchaser  of 
bonds  in  nearly  every  case  is  such  a  bona  fide  holder,  the  ques- 
tions which  particularly  concern  such  purchaser  are  those 
relating  to  the  authority  of  municipal  corporations  to  issue 
this  class  of  securities. 


CHAPTER  II. 


POWER  TO  ISSUE  BONDS. 

7.  How    Conferred  —  Implied     Power  : —  Municipal 
corporations  are  subdivisions  of  a  state  organized  for  the  purpose 
of  local  government,  and  their  corporate  powers  are  limited  to 
the  purposes  for  which  they  were  organized.     Whenever  it  is 
deemed  expedient   to  confer  upon  such  a  municipality  the 
pbwer  to  borrow  money  and  issue  bonds,  or  other  negotiable 
securities,  it  is  the  almost  invariable  practice  to  do  so  by  express 
legislative  authority.     The  question  whether  municipal    cor- 
porations possess  the  power  to  issue  negotiable  bonds  without 
such  express  power  has  been  the  subject  of  a  great  amount  of 
discussion,    and    much   conflict    of  opinion    in  this  country. 
Nearly  all  of  the  leading  elementary  writers  on  the  subject  of 
municipal  corporations  and   public    securities    have    argued 
against  the  existence  of  such  an  implied  power.     The  differ- 
ence of  opinion  seems  to  have  arisen  largely  from  failing  to 
make  any  distinction  between  private  and  public  corporations. 
It  is  the  well  settled  American  doctrine  that  a  private  corpora- 
tion, within  the  scope  of  its  charter  powers,  and  for  all  legiti- 
mate purposes,  may  make  contracts,  incur  debts,  and  issue 
therefor  negotiable  notes  or  other  evidences  of  indebtedness, 
unless  expressly  restricted  by  law,  the  power  being  conceded 
as  necessary  to  accomplish  the  purposes  for  which  such   a 
corporation  is  organized. 

8.  Municipal  corporations  are  created  only  for  the  admin- 
istration of  local  government,  the  providing  and  care  of  public 
buildings,  streets,  highways  and  other  local  improvements  of  a 
general  nature,  necessary  for  the  comfort,  protection  and  well 
being  of  the  people  within  the  geographical  limits    of  the 
municipality,  and,  for  those  purposes  are  usually  invested  with 


6  POWER   TO   ISSUE   BONDS. 

the  power  of  taxation  against  the  property  within  their  limits. 
It  is  argued  that  the  issue  of  negotiable  paper  is  not  necessary 
for  the  purposes  of  such  public  corporations,  and  therefore  does 
not  exist  unless  expressly  authorized.  There  is,  however,  a 
distinction  usually  made  between  strictly  municipal  corpora- 
tions, and  what  are  termed  quasi-public  corporations. 

9.  Counties,    Townships,   etc.: — The  corporate  powers  of 
counties,  townships,  parishes  and  similar  subdivisions,   or  as 
they   are   frequently    known,    quasi-public    corporations,    are 
usually  more  strictly  construed  than  in  the  case  of  cities  and 
other  incorporated  municipalities.     The  general  current  of  all 
the  decisions,  both  state  and  federal,  is  to  the  effect  that  this 
class  of  public  corporations  have  not  the   implied  power  to 
borrow  money  and   issue   negotiable  bonds,   and,    that  such 
power  must  be  expressly  conferred  by  legislative  authority. 

10.  Claiborne  County  Case : — The  position  of  the  United 
States  Supreme  Court  is  expressed  in  the  Claiborne  County  case,1 
in  which  they  decide  that  the  power  of  a  county  to  erect  a 
courthouse  did  not  involve  or  include  the  authority  to  issue 
bonds  in  payment  therefor,  and  held  such  bonds  as  invalid. 
The  opinion  was  delivered  by  Justice  Bradley,  and  in  the  course 
of  which  he  says,  "  Our  opinion  is  that  mere  political  bodies, 
constituted  as  counties  are,  for  the  purpose  of  local  government 
and  administration,  and  having  the  power  of  levying  taxes  to 
defray  all  public  charges  created,  whether  they  are,  or  are  not 
formally  invested  with  corporate  capacity,  have  no  power  or 
authority  to  make  and  utter  commercial  paper  of  any  kind, 
unless  such  power  is  expressly  conferred  upon  them  by  law,  or 
clearly  implied  from  some  other  power  expressly  given,  which 
cannot  be  fairly  exercised  without  it."     And  referring  to  previ- 
ous decisions  of  the  court  to  the  same  effect,   "  It  is  a  power 
which  ought  not  to  be  implied  from  the  mere  authority  to  make 
such  improvements."     As  to  counties  and  townships,    "We 
consider  such  a  power  as  entirely  foreign  to  the  purpose  of 
their  creation,  and,  as  never  to  be  conceded  except  by  express 

1  Claiborne  Co.  (Tenn.)  v.  Brooks,  in  U.  S.  400  (1884). 


POWER   TO   ISSUE   BONDS.  7 

legislation,  or  at  least  from  strong  implications  from  such 
legislation."  This  may  be  also  taken  as  a  conservative  state- 
ment of  the  present  law  as  declared  by  most  of  the  state  courts.1 

1 1 .  Implied  Power  of  Cities  : — Have   incorporated   cities 
and  other  municipal  corporations  proper  an  implied  power  to 
borrow  money  and  issue  bonds  ?     This  question  has  probably 
given  rise  to  a  more  perplexing  conflict  of  opinion  and  decision 
than   any  other   relating  to  the  subject  of  municipal  bonds. 
The  law  as  declared  by  the  highest  courts  in  several  of  the 
states  is  unquestionably  in  favor  of  the  existence  of  such  an 
implied  power,  but  it  has  usually  arisen  in  cases  where  such  a 
power  was  held  necessary  as  an  incident  to  the  exercise  of  some 
other  power  expressly  conferred  by  law.     As  to  what  charter 
provisions  include  this  incidental  power  to  borrow  money  and 
issue  bonds,  or  under  what  circumstances  the  power  arises,  and 
what  is  the  commercial  character  of  the  bonds  issued  there- 
under, are  questions  upon  which  even  the  decisions  in  favor  of 
the  existence  of  such  a  power  are  not  by  any  means  uniform. 
A  reference  to  some  of  the  state  decisions  will  illustrate  the 
law  as  held  by  this  class  of  cases. 

12.  Decisions  of  State  Courts  —  Ohio  —  Wisconsin  : — In 
one  of  the  first  cases  in  which  the  question  was  considered, 
the  Ohio  Supreme  Court  in   1836,   decided  that  the  town  of 
Chillicothe,  which  possessed  the  authority  to  purchase  real 
estate,  erect  public  buildings  and  other  usual  powers  vested  in 
municipalities,  had  the  incidental  right  to  borrow  money  for 
such    corporate    purposes.     The    suit    was    on  certificates  of 
indebtedness,  executed  by  the  mayor   under    seal,    and    the 
decision  was  based  upon  the  right  of  the  town  to  borrow 
money  and  issue  evidences  of  indebtedness,  in  carrying  out  the 
express  powers  granted  by  its  charter.2    This  Ohio  case  was 
followed  by  a  number  of  cases  in  Wisconsin  where  it  was  held 
that  an  express  charter  power  in  the  city  of  Madison  to  provide 
hospital  and  cemetery  grounds,   authorized  the  city  to  issue 

1  See  however  the  New  York  case  of  Hubbard  v.  Sadler,  104  N.  Y. 
223  (§15  herein). 

2  Bank  v.  Chillicothe,  7  Ohio,  Part  II.  31. 


8  POWER   TO   ISSUE   BONDS. 

bonds  for  grounds  purchased  for  such  purposes.1  In  another 
case  in  the  same  state,  the  Supreme  Court  decided  that  when 
a  municipal  corporation  was  authorized  by  its  charter  to 
purchase  fire  apparatus,  establish  markets,  and  to  do  other 
things  for  which  money  was  required,  in  the  absence  of  any 
positive  restriction,  such  corporation  could  borrow  the  money  as 
an  incident  to  the  exercise  of  those  general  powers  ;  that  the  fact 
that  the  legislature  had  passed  acts  authorizing  such  corpora- 
tions to  borrow  for  purposes  clearly  municipal,  was  not  conclu- 
sive upon  the  question  of  the  right  of  the  corporation  to  borrow 
money  without  such  authority;  and  that  the  power  of  taxa- 
tion conferred  by  the  charter  of  such  a  corporation  does  not 
exclude  the  power  to  borrow  money." 

13.  Pennsylvania — Texas : — In  a  Pennsylvania  case3  the 
Supreme  Court  held  that  where  a  municipal  corporation  has 
lawfully  contracted  a  debt,   it  has  the  implied  power,  unless 
restricted  by  its  charter  or  prohibited  by  statute,  to  evidence 
the  same  by  a  bill,  bond,  note  or  other  instrument ;  that  when 
the  purpose  for  which  the  money  is  borrowed  is  germane  to  the 
purpose  for  which  the  corporation  is  created,  it  has  the  power 
to  borrow  money  and  issue  its  bonds  ;  that  the  power  to  con- 
tract a  debt  carries  with  it  by  necessary  implication  the  right 
to  give  an  appropriate  acknowledgment  of  such  debt,  and  to 
agree  with  the  creditor  as  to  the  time  and  mode  of  payment ; 
and  that  in  the  absence  of  statutory  provisions  there  is  no  rule 
of  law  limiting  the  extent  of  such  credit.     This  would  seem  to 
be  an  extreme  view  of  the  rights  of  such  a  corporation  to  issue 
this  class  of  securities,  and  three  of  the  judges  did  not  concur 
therein.     In  Texas  the  authority  to  organize  a  fire  department 
and  regulate  the  same,  was  held  to  include  the  power  to 
purchase  fire  engines,  and  issue  negotiable  bonds  in  payment 
therefor.4 

14.  New  York : — Under  the  charter  authority  to  establish 

1  State  v.  Madison,  7  Wis.  688. 

2  Mills  v.  Gleason,  1 1  Wis.  470. 

8  Williamsport  v.  Commonweath,  84  Pa.  St.  487  (1877). 
4  Desmond  v.  City  of  Jefferson,  19  Fed.  Rep.,  483. 


POWER   TO    ISSUE   BONDS.  9 

and  regulate  markets,  it  was  held  in  an  early  New  York  case1 
that  in  the  absence  of  any  law  forbidding,  the  city  of  Buffalo 
could  purchase  grounds  for  a  market  on  credit,  and  issue  bonds  to 
pa}'  for  the  same.  The  city,  in  pursuance  of  a  resolution  of  the 
common  council,  purchased  such  grounds  for  thirty-five  thous- 
and dollars,  and  gave  in  payment  its  bond  for  that  amount, 
payable  in  twenty-five  years,  with  semi-annual  interest.  In  a 
suit  by  tax-payers  for  an  injunction  restraining  the  levy  of  a 
tax  to  pay  the  interest  upon  such  bond,  the  Court  of  Appeals 
declared  the  bond  valid,  holding  that  the  power  to  establish 
markets  included  the  power  to  purchase  grounds  on  credit  and 
give  evidences  of  indebtedness  therefor.  The  court,  however, 
intimated  against  the  right  of  the  city  under  the  circumstances 
to  borrow  money  for  any  such  purposes,  making  a  distinction 
between  issuing  bonds  to  pay  for  an  object,  and  issuing  bonds 
to  borrow  money  to  pay  for  such  object,  although  this  question 
was  not  involved  in  the  case. 

15.  In  a  recent  case2  in  the  same  court,  the  right  of  county 
supervisors  to  issue  bonds  in  anticipation  of  assessments  levied 
under  certain  statutes  of  that  state,  seems  to  have  been  sus- 
tained. The  board  of  supervisors  of  King's  County  were 
authorized  by  statute  to  lay  out  and  construct  certain  streets 
and  avenues,  and  to  provide,  by  limited  or  general  assess- 
ment, for  the  payment  of  damages  awarded  for  property  taken. 
Under  this  authority  the  supervisors  provided  by  resolution 
for  an  assessment  on  the  property  benefited,  and  that  any  defi- 
ciency should  be  paid  by  general  taxation.  In  anticipation  of 
such  tax  and  assessment,  the  board  provided  for  the  issue  of 
short  time  bonds  running  from  two  to  six  years.  The  court 
held  that  the  general  power  conferred,  including  the  author- 
ity to  provide  for  the  estimate  and  award  of  damages  and 
other  expenses,  involved  the  right  of  the  commissioners,  as  "  a 
local  legislature ' '  to  whom  had  been  delegated  by  the  State 
legislature  its  power  and  authority  over  the  streets  and  avenues 
improved,  to  issue  municipal  bonds  for  the  purpose  of  antici- 

1  Ketchum  v.  City  of  Buffalo,  14  N.  Y.,  356  (1856). 

2  Hubbard  v.  Sadler,  104  N.  Y,  223  (1887). 


10  POWER   TO    ISSUE    BONDS. 

pating  the  slow  collection  of  the  taxes  and  assessments  levied. 
The  court  appears  to  hold  that  municipal  corporations,  includ- 
ing such  boards  of  county  supervisors,  have  the  implied  power  to 
borrow  money  and  issue  bonds  for  corporate  purposes  without 
express  authority.  In  referring  to  the  express  grant  by  the 
legislature  of  authority  to  issue  bonds  for  many  specified  munic- 
ipal purposes,  which,  as  argued,  excluded  the  intention  to  bestow 
it  in  other  cases,  the  court  says,  that  in  the  case  of  special,  and 
to  some  extent  unusual  and  extraordinary  expenditures,  doubts 
might  possibly  have  arisen  whether  the  creation  of  a  long  term 
bonded  debt  was  a  necessary  incident  to  the  general  grant  of 
power.  The  express  authority  ' '  may  not  have  been  needed, 
but  if  it  was,  it  seems  to  have  been  rather  for  the  purpose  of 
limiting  and  defining  the  power  of  borrowing  money,  which 
might  have  flowed  from  a  general  grant  of  authority,  than  to 
supply  its  absence,  and  cannot  by  inference  forbid  the  borrow- 
ing of  money  for  short  periods  in  anticipation  of  a  tax  ordered 
to  be  laid  for  reimbursement. ' ' 

16.  Kansas  —  Indiana  : —  The  city  of  Wyandotte  had 
express  power  to  open  and  improve  streets,  avenues,  alleys  and 
make  sidewalks  within  the  city.  The  statute  provided  that  for 
making  and  repairing  sidewalks,  assessments  should  be  made 
on  all  of  the  lots  and  lands  abutting  the  improvement.  To 
pay  for  certain  sidewalks,  the  city  issued  bonds  called  ' '  special 
sidewalk  bonds, ' '  which  recited  upon  their  face  that  they  were 
issued  in  the  payment  for  specified  sidewalks.  The  court  sus- 
tained the  validity  of  the  bonds,  holding  that  the  authority  to 
contract  for  the  making  of  such  improvements  necessarily 
implied  an  authority  to  pay  for  the  same,  and  in  the  absence  of 
any  statute  restricting  the  manner  of  such  payment,  the  author- 
ity to  give  a  suitable  acknowledgment  of  the  debt  by  bond, 
note  or  other  contract.1 

In  Indiana  the  Supreme  Court,  in  defining  the  powers  of 
municipal  corporations,  have  said  "Municipal  charters  are  to 
be  construed  as  to  carrying  into  effect  every  power  clearly 

1  Wyandotte  v.  Zeitz,  21  Kas.  649  (1879). 


POWER  TO   ISSUE   BONDS.  Ir 

intended  to  be  conferred,  and  every  power  necessary  to  be 
implied  for  the  complete  exercise  of  the  powers  granted."1 
"Corporations,  along  with  the  express  and  substantive  powers 
conferred  by  their  charters,  take  by  implication  all  the  reason- 
able modes  of  exercising  such  powers,  which  a  natural  person 
may  adopt  in  the  exercise  of  similar  powers."2  It  has  been 
held  in  that  state  that  the  trustees  of  a  school  township  could 
issue  a  valid  negotiable  note  for  appropriate  school  supplies, 
but  that  such  note  was  subject,  in  the  hands  of  whomsoever  it 
might  come,  to  all  the  equities  existing  between  the  original 
parties,  and  that  the  proceeds  for  which  the  note  was  given 
must  have  been  used  for  school  purposes.3 

17. — Nebraska: — A  decision  by  the  Supreme  Court  of  Ne- 
braska* during  the  present  year  (1888)  illustrates  this  same 
doctrine  of  implied  powers  of  municipal  corporations.  The 
city  of  Norfolk,  a  city  of  the  second  class,  being  authorized 
under  the  general  law  to  construct  drains  and  sewers  and  im- 
prove streets,  voted  to  issue  eight  thousand  dollars  in  city 
bonds  for  the  purpose  of  constructing  a  sewer  along,  and  grad- 
ing one  of  the  main  streets  of  such  city.  The  court  sustained 
the  validity  of  the  bonds  as  an  incident  to  the  express  authority 
to  make  such  improvements,  arguing  that  the  implied  power  to 
issue  bonds  under  the  circumstances  was  necessary  to  carry 
out  and  make  effective  the  powers  expressly  conferred  by  stat- 
ute. In  this  case  the  court  reviews  at  considerable  length  sev- 
eral of  the  above  and  other  decisions  substantially  to  the  same 
effect  and  supporting  such  implied  authority  in  cities,  and  says  : 
' '  We  are  rally  aware  of  the  necessity  for  great  care  in  the  ex- 
ercise of  the  right  to  borrow  money  by  municipal  corporations, 
and  that  the  power  to  do  so  ought  not  to  be  held  to  have  been 
conferred  except  when  expressly  given  or  when  absolutely  nec- 

1  Smith  v.  city  of  Madison,  7  Ind.  81. 

2  New  England  Co.  v.  Robinson,  25  Ind.  536 ;  19  Ind.  450  ;  60  Ind. 
504 ;  Miller  v.  Board  of  Commissioners  of  Dearborn  Co.,  66  Ind.  162  (1879) 
and  cases  cited. 

3  Sheffield  School  Tp.  v.  Andress,  56  Ind.  157  ;   also  Reeve  School 
Tp.  v.  Dodson,  98  Ind.  497  (1884)  and  cases  cited. 

4  State  v.  Babcock,  22  Neb.  614. 


12  POWER   TO    ISSUE    BONDS. 

essary  to  carry  out  and  make  effective  the  power  expressly 
conferred,"  but  decided  the  case  under  consideration  as  fall- 
ing within  the  latter  class. 

18.  Iowa — Powers  of  Municipal  Corporations: — In  an  early 
Iowa  case,  the  court   held  that  the  charter  power   to   grade 
streets  authorized  the  city  of  Alton  to  borrow  money  and  issue 
bonds  of  the  city  for  such  purposes.1     In  later  cases  the  court 
has  defined  the  powers  of  municipal  corporations.     ' '  A  munic- 
ipal corporation  can  possess  and  exercise  the  following  pow- 
ers and  no  others :    those  granted  in  express  words ;    those 
necessarily  implied  or  necessarily  incident  to  the  powers  ex- 
pressly granted  ;    and  those  absolutely  essential  to  the  declared 
objects  and  purposes  of  the  corporation."2    "  Where  no  express 
authority  is  given  to  issue  negotiable  paper,  and  such  power  is 
not  necessary  as  an  incident  to  powers  granted,  it  should  not 
be  held  to  exist  by  implication."3    "  Without  express  authority 
municipal  corporations  cannot  bind  themselves  by  paper  hav- 
ing the  elements  of  negotiability,  and  such  paper  has  no  other 
binding  effect  in  the  hands  of  a  bona  fide  holder  for  value, 
before  maturity,  than  in  the  hands  of  the  original  holder."* 

19.  Illinois: — In  a  case5  which  has  been  frequently  cited  by 
those  arguing  in  favor  of  the  implied  power  of  municipal  corpora- 
tions to  issue  negotiable  bonds,  the  Illinois  Supreme  Court  in 
1868, decided  that  the  power  to  pay  debts  or  provide  for  their  pay- 
ment, to  fund  them  and  issue  the  necessary  evidence  therefor, 
exists  in  every  corporation  to  the  same  extent  as  in  natural 
persons,  and  this  without  any  express  authority  in  its  charter ; 
that  corporations  have  all  the  powers  of  ordinary  persons  as  to 
their  contracts,  except  when  they  are  expressly  or  by  necessary 
implication  restricted.      In  subsequent  cases  we  understand 
that  court  to  have  greatly  modified  these  views.     In  the  case 

1  Sturtevant  v.  city  of  Alton,  3  McL.   Iowa,  393. 

2  25  Iowa  163. 

3  Clark  v.  DesMoines,  19  Iowa,  199. 

4  Dively  v.  Cedar  Palls,  21  Iowa,  565.  Also  see  19  Iowa,  21  and  248; 
3  9  Iowa,  447  ;  52  Iowa,  193. 

5  City  of  Galena  v.  Corwith,  48  Ills.  423. 


POWER   TO   ISSUE   BONDS.  13 

of  County  of  Hardin  v.  McFarlan,1  the  court,  in  referring  to 
the  Galena  case,  say  the  decision  in  that  case  was  based  upon 
the  ground  that  the  city  by  its  charter  had  power  to  borrow 
money,  and  not  having  been  restricted  as  to  the  means  of  exer- 
cising this  power,  could  issue  the  bonds,  but  that  more  was 
said  in  that  case  than  the  subject  justified,  and  that  it  needed 
modification,  confining  it  to  cases  where  the  charter  or  incor- 
poration expressly  grants  the  power,  for  a  corporation  cannot 
exercise  any  powers  save  those  granted  or  necessarily  implied 
in  order  to  carry  into  effect  the  granted  power.  While  the 
opinion  in  this  latter  case  was  dissented  to  by  Judges  Walker 
and  Scott,  the  principle  therein  stated  seems  to  have  been 
adopted  substantially  by  the  court  in  subsequent  cases. 

20.  Law  Case: — In  the  case  of  Law  v.  People2  in  1877, 
Justice  Walker,  in  delivering  the  opinion  of  the  court,  says, 
' '  The  law  is,  and  all  persons  are  presumed  to  know  it,  that 
municipal  bodies  can  only  exercise  such  powers  as  are  conferred 
upon  them  by  their  charters,  and  all  persons  dealing  with  them 
must  see  that  the  body  has  power  to  perform  the  proposed  act. 
Such  corporations  are  created  for  governmental  and  not  for 
commercial  purposes.  Hence,  power  to  borrow  money  or 
create  indebtedness  is  not  an  incident  to  such  local  govern- 
ments, and  the  power  cannot  be  exercised  unless  it  is  conferred 
by  their  charter,  and  no  one  has  the  right  to  presume  the  exist- 
ence of  such  a  power,  and  persons  proposing  to  loan  money  to 
these  bodies  must  see  that  the  power  exists."  However,  the 
evidences  of  indebtedness  involved  in  this  Law  case  were  not 
bonds,  but  certificates  for  temporary  loans  made  by  the  city  of 
Chicago,  and  the  principal  question  before  the  court  was  the 
validity  of  such  certificates,  they  being  in  excess  of  the  con- 
stitutional limitation  as  to  the  city's  indebtedness. 

And,  again  in  1880,  in  the  case  of  Hewitt  v.  Normal 
School  District,3  the  court  decided  that  ' '  the  borrowing  of 
money,  the  purchase  of  property  on  time,  and  the  giving  of 
commercial  paper,  are  not  inherent  in,  or  even  powers  usually 

1  82  Ills.  138  (1876). 

*  87  Ills.  385.         3  94  Ills.  528. 


14  POWER   TO   ISSUE    BONDS. 

conferred  upon,  municipalities,  and,  unless  endowed  with  such 
powers  in  their  charters,  they  have  no  authority  to  make  and 
place  on  the  market  such  paper,  and  persons  dealing  in  it 
must  see  that  the  power  exists.  This  has  long  been  the  rule 
of  this  court." 

21.  United  States  Supreme  Court: — We   do   not   under- 
stand that  the  U.  S.  Supreme  Court  has  ever  directly  decided 
the  question  as  to  the  existence  of  the  implied  power  in  cities 
to  issue  negotiable  bonds.     The  question  as  to  such  right  to 
issue  negotiable  paper  was  before  the  court  in   1874  in  the 
leading  case  of  Mayor  of   Nashville  v.    Ray,1   and   although 
the   decision   therein   \vas    based   on   other   grounds,    in   the 
opinion  of  a  majority  of  the  court,  delivered  by  Justice  Bradley, 
the  position  was  taken  very  strongly  against  the  existence  of 
such  a  right,  at  least  to  issue  and  invest  such  paper  with  the 
character  of  commercial  paper,  so  as  to  render  them  absolute 
obligations  in  the  hands  of  a  bona  fide  holder.      "The  power 
to  borrow  money  does  not  belong  to  a  municipal  corporation  as 
an  incident  of  its  creation.     To  be  possessed  it  must  be  con- 
ferred by  legislation,  either  express  or  implied.     It  does  not 
belong  as  a  mere  matter  of  course  to  local  governments  to  raise 
loans.     Their  powers  are  prescribed  by  their  charters,  and  those 
charters  provide  the  means  for  exercising  the  powers,  and  the 
creation  of  specific  means  excludes  others.     *     *     *     *     If 
in  the  exercise  of  their  important  trusts  the  power  to  borrow 
money  and  issue  bonds  or  other  commercial  securities  is  needed, 
the  legislature  can  easily  confer  it  under  the  proper  limitations 
and  restrictions,  and  with  proper  provisions  for  future  repay- 
ments.  Without  such  authority  it  cannot  be  legally  exercised.  "2 

22.  Municipal  Warrants,  Orders,  Drafts,  Certificates,  etc.: 
— The  same  opinion  says:     "Indebtedness  may  be  incurred 
to  a  limited  extent  in  carrying  out  the  objects  of  the  corporation. 
Evidences  of  such  indebtedness  may  be  given  to  the  public 

1  19  Wall.  468;  also  see  Town  of  Concord  v.  Robinson,  121  U.  S., 
165  (1887). 

2  In  the  case  of  Holmes  v.  City  of  Shrevepprt,  31  Fed.  Rep.,  113 
(1887),  the  implied  power  of  a  city  to  issue  negotiable  notes  or  bonds  to 
pay  authorized  indebtedness  appears  to  be  sustained. 


POWER   TO   ISSUE    BONDS.  15 

creditors,  but  they  must  look  to  and  rely  on  the  legitimate 
mode  of  raising  the  funds  for  its  payment.  That  mode  is  taxa- 
tion. *  *  *  *  Vouchers  for  money  due;  certificates  of  in- 
debtedness for  service  rendered,  or  for  property  furnished  for  the 
uses  of  the  city;  orders  or  drafts  drawn  by  one  city  officer  upon 
another,  or  any  other  device  of  the  kind  used  for  liquidating 
the  amounts  legitimately  due  to  public  creditors,  are  of  course 
necessary  instruments  for  carrying  on  the  machinery  of  mu- 
nicipal administration,  and  for  anticipating  the  collection  of 
taxes.  *  *  *  *  Custom  and  usage  may  have  so  far  as- 
similated such  orders,  drafts,  or  certificates  to  regular  commercial 
paper  as  to  make  them  negotiable  or  transferable  by  delivery  or 
indorsement.  This  quality  renders  them  more  convenient  for 
the  purpose  of  the  holder,  and  has  frequently,  but  we  think 
erroneously,  led  to  the  idea  that  they  are  invested  with  the  other 
characteristics  of  commercial  paper — that  is,  freedom  from  all 
legal  and  equitable  defenses  in  the  hands  of  a  bona  fide  holder. 
But  every  holder  of  a  city  order  or  certificate  knows  that  to  be 
valid  and  genuine  at  all,  it  must  have  been  issued  as  a  voucher 
for  city  indebtedness.  It  could  not  be  lawfully  issued  for  any 
other  purpose.  He  must  take  it  therefore  subject  to  the  risk 
that  it  has  been  properly  and  lawfully  issued.  The  face  of  the 
paper  itself  is  notice  to  him  that  its  validity  depends  upon  the 
regularity  of  its  issue."  And  the  same  court,  in  a  later  case,1 
decided  that  county  warrants,  although  in  form  negotiable, 
are  not  negotiable  in  the  sense  of  the  law  merchant,  as  to  shut 
out  in  the  hands  of  a  bona  fide  purchaser  inquiries  as  to  their 
validity,  or  preclude  defenses  or  setoffs  which  could  be  made 
of  them  in  the  hands  of  the  original  parties.  ' '  All  the  courts 
agreed  that  the  instruments  are  mere  prima  facie  and  not  con- 
clusive evidences  of  the  validity  of  the  allowed  claims  against 
the  county  by  which  they  are  issued."2 

1  Wall.  v.  Monroe  Co.,  103  U.  S.,  74  (1881);  103  U.  S.,  559. 

2  Nashville  v.  I/indsey,  19  Wall.,  485. 

For  a  general  discussion  of  warrants  and  similar  classes  of  munici- 
pal paper,  see  Dillon's  Municipal  Corporations,  $  487  et  seq.,  and  cases 
cited. 

Burroughs'  Public  Securities,  pp.  623-639. 


1 6  POWER   TO    ISSUE    BONDS. 

23.  Galveston  Case : — The  city  of  Galveston  contracted 
for  the  building  of  certain  sidewalks,  and  agreed  in  payment 
thereof  to  issue  bonds  of  the  city,  denominated  "  Galveston  City 
Bonds  for   Sidewalk  Improvement."     Before    the   work    was 
entirely  completed  the  city  council  declared  the  contract  null 
and  void,  and  suit  was  brought  by  the  contractors  thereon.     The 
city  defended  especially  on  the  ground  that  the  contract  to 
issue  bonds  was  ultra  vires.     The  U.  S.  Supreme  Court  decided 
that  the  city  was  liable  under  the  contract,  but  did  not  decide 
directly  whether  the  city  could  issue  bonds,  but  intimated  to 
the  contrary.     They  say  in  substance  that  the  issue  of  the 
bonds  not  appearing  to  be  prohibited  by  statute,  there  was  at 
most  a  defect  of  power ;  that  if  it  were  conceded  that  the  city 
had  no  lawful  authority  to  issue  the  bonds,  it  does  not  follow 
that  the  contract  was  wholly  illegal,  and  that  the  plaintiffs  had 
no  rights  thereunder ;  that,  at  most,  the  issue  was  unauthor- 
ized, and  in  such  case,  though  a  specific  performance  of  an 
engagement  to  do  a  thing  transgressive  of  its  corporate  powers 
might  not  be  enforced,  the  corporation  could  be  held  liable  on 
the  contract.     The  city  was  liable  for  whatever  benefits  it  had 
received,  whether  or  not  that  part  of  the  contract  relating  to 
the  issue  of  such  bonds  was  valid.1 

24.  Review: — It  will  be  noticed  that  in  nearly  every 
case  in  which  the  implied  power  to  issue  municipal  bonds  has 
been  sustained,  the  bonds  appear  to  have  been  issued  to  the 
con  tractors,  or  in  payment  of  some  legitimate  corporate  debt. 
In  the  opinion  of  a  number  of  the  cases,  and  of  some  of  the 
leading  elementary  writers,  there  is  a  fundamental  difference 
between  issuing  bonds  to  pay  for  corporate  improvements,  and 
the  issuing  of  such  bonds  for  the  purpose  of  borrowing  money 
to   pay    for    such    improvements.2     The    general    weight   of 
authority  is  in  support  of  the  proposition  that  if  express  powers 
are  granted,  for  the  accomplishment  of  which  it  is  evident  that 
ordinary  taxation  will  be  insufficient,  the  power  to  borrow  money 

1  Hitchcock  v.  City  of  Galveston,  96  U.  S.  341  (1878). 

2  Ketchmn  v.  City  of  Buffalo,  14  N.  Y.  356 ;  Daniel's  Negotiable 
Securities,  81530. 


POWER    TO    ISSUE    BONDS.  1 7 

and  issue  bonds  may  be  held  to  be  implied,  as  a  necessary  inci- 
dent to  the  express  powers  thus  conferred.  But  such  bonds 
cannot  be  safely  said  to  be  free  from  equities,  or  to  possess  the 
usual  elements  of  commercial  paper.  In  very  few  of  the  cases 
holding  such  implied  powrer  is  the  character  of  the  bonds 
issued  thereunder  discussed,  although  we  do  not  understand 
that  such  bonds  have  all  the  attributes  of  bonds  issued  under 
express  authority,  but  are  usually  subject  to  any  equities  exist- 
ing between  the  original  parties  to  the  transaction,  on  account 
of  which  they  were  issued.  Some  of  the  cases  place  the  holder 
of  such  bonds  as  merely  the  equitable  assignee  of  the  original 
creditor  of  the  municipality,  with  the  same  rights  as,  and  no 
more  than,  such  creditor. 

25.  Conclusion:—  While  the  cases  cannot  be  harmonized, 
the  right  of  municipal  corporations  to  issue  bonds  by  implica- 
tion under  some  circumstances  seems  to  be  recognized  in  nearly 
all  of  the  decisions.  It  has  been  held  in  a  number  of  cases  that 
the  power  to  borrow  money  includes  the  right  to  issue  bonds 
therefor.1  The  U.  S.  Supreme  Court  has  held  that  "  authority  to 
borrow  money  for  any  public  purpose ' '  authorized  the  city  of 
Burlington  to  subscribe  to  railroad  stock  and  issue  bonds  to 
the  company  ;  that  authority  to  a  city  ' '  to  borrow  money  for 
any  object  in  its  discretion"  authorized  the  issue  of  bonds  to 
pay  for  money  borrowed  as  a  subscription  to  a  railroad  corpo- 
ration ;  that  authority  to  a  city  to  subscribe  to  stock  in  a  rail- 
way company  as  fully  as  an  individual,  authorized  the  issue  of 
negotiable  bonds  in  payment  for  such  stock  or  subscription. 
Whether  the  power  to  borrow  money  and  issue  bonds  exists 
must  be  ascertained  from  an  examination  of  the  entire  charter 
or  statutes  specially  applicable  to  the  municipality,  and  of  all 
the  circumstances  surrounding  the  particular  case.  We  do  not 
think  that  such  corporations  usually  have  the  incidental  or  in- 
herent power,  in  their  grants  of  municipal  powers,  as  a  means 
to  discharge  their  ordinary  municipal  functions,  or  that  such 
an  implication  exists  in  respect  to  debts  or  liabilities  arising 

1  Folsom  v.  School  Directors,  91  111.  404 ;  Dillon's  Mun.  Corps.  3d 
Ed.  §  1 25- 1 27,  and  cases  cited. 


1 8  POWKK   TO   ISSUE    BONDS. 

from  the  discharge  of  their  ordinary  municipal  duties.  It  is 
undoubtedly  the  only  safe  rule  for  investors  in  this  class  of  se- 
curities as  well  as  for  the  municipalities  themselves,  to  assume 
the  position  of  the  non-existence  of  an  implied  power  in  muni- 
cipal corporations  to  issue  negotiable  bonds  except  where  the 
circumstances  are  such  as  have  been  decided  to  give  such 
authority.  Also,  in  those  cases  where  the  right  to  issue  such 
bonds  has  been  clearly  recognized,  in  the  absence  of  authorita- 
tive decisions  to  that  effect,  such  bonds  should  not  be  considered 
to  possess  all  the  characteristics  of  commercial  paper,  but  subject 
to  any  existing  equities  between  the  original  parties,  substan- 
tially the  same  as  municipal  warrants.1 

1  As  to  the  general  subject  of  Implied  Powers  of  Municipal  Corpora- 
tions in  the  issue  of  bonds,  see  Burroughs  on  Public  Securities  (1881), 
pp.  167-211;  Dillon's  Municipal  Corporations,  3d  Ed.  (1881),  ^117-129, 
307-509;  Daniel  oil  Negotiable  Instruments,  3d  Ed.,  £? 1527-1532. 


CHAPTER  III. 


FOR  WHAT  PURPOSE  BONDS  MAY  BE  ISSUED. 

26.  Purpose  Must  Be  Public  : — The  power  of  munic- 
ipal  corporations   to   issue   bonds    is    limited    to    public    or 
corporate   purposes.     The  means  for  the  payment  of  municipal 
debts  must  be  obtained  almost  entirely  from  some  form  of  tax- 
ation on  the  property  or  inhabitants  within  the  municipality. 
It  follows  that  the  purposes  for  which  municipal  bonds  may  be 
issued  are  confined  to  those  for  which  taxes  may  be  legally 
levied.      That  municipal  taxation  cannot  be  exercised  or  bonds 
issued  in  aid  of  persons  or  enterprises  purely  private,  is  a  legal 
proposition  now  settled  beyond   successful   controversy ;   but 
to  distinguish  between  public  and  private  purposes  in  the  appli- 
cation of  the  above  principle  has  not  always  been  an  easy  task. 
To  do  this  it  is  necessary  to  keep  in  view  the  object  for  which 
municipal  corporations    are    created.     Among    the    purposes 
clearly  public  are  :  the  providing  of  courthouses,  schoolhouses, 
and  other  public  buildings  ;  the  paving  and  improving  of  streets 
and  other  highways  ;  the  construction  of  waterworks  or  the 
providing  of  a  water  supply  for  domestic  and  fire  protection  ; 
the  laying  out  of  cemeteries  and  parks  ;  the  building  of  public 
bridges,  etc.     There  are  other  purposes  for  which  bonds  may 
be  issued,  but  which  are  not  so  evidently  public  as  those  men- 
tioned. 

27.  Railroad  Aid  Bonds:  —  Probably   no   question  in 
American    jurisprudence    has    been    more    persistently     and 
thoroughly   litigated  than  the  validity  of   municipal  bonds 
issued  in  aid  of  railroads.     For  nearly  a  score  of  years  the 
question  in  some  form  was  almost  continually  before  our  state 
and  federal  courts,  and  its  judicial  history  is  one  of  much 
interest.1 

1  Coler's  Municipal  Bonds,  a  two-volume  work  published  in  1872, 
was  almost  wholly  devoted  to  a  review  of  the  leading  cases  on  this 
question. 

09) 


2O  FOR    WHAT    PURPOSE    BONDS    MAY    BK    ISSUED. 

The  U.  S.  Supreme  Court  has  repeatedly  sustained  the 
validity  of  laws  authorizing  the  issue  of  such  bonds,  in  the 
absence  of  special  constitutional  restrictions.  In  the  state 
courts,  after  more  or  less  change  in  the  decisions  of  some  of 
them,  at  present  we  know  of  only  one  which  continues  to  hold 
against  the  right  of  municipalities  to  grant  aid  to  railroads.1 
The  Supreme  Court  of  Michigan  has  steadily  held  such  aid  to 
be  unauthorized,  and  legislative  acts  granting  power  to  munic- 
ipalities to  issue  bonds  in  aid  of  railroads  to  be  unconstitu- 
tional.2 Othenvise  the  validity  of,  this  class  of  bonds,  in  the 
absence  of  constitutional  restrictions,  and  when  expressly 
authorized,  may  be  considered  as  fully  settled  in  this  country.3 
But  it  is  also  well  settled  that  the  issue  of  such  bonds  must  be 
expressly  authorized. 

28.  Aiding  Railroads: — The  correctness  of  the  principle 
that  taxation  could  be  made,  and  bonds  issued  in  aid  of  private 
railroad  corporations  has  been  ably  and  vigorously  contested 
by  several  leading  elementary  writers  and  jurists,  but  the 
legality  at  least  of  the  principle  is  now  too  well  established  for 
further  controversy.  That  the  doctrine  has  led  to  extravagant 
municipal  bonding,  which  in  many  cases  has  been  disastrous, 
and  in  more  than  one  instance  has  resulted  in  municipal  bank- 
ruptcy, cannot  be  denied.  Our  federal  reports,  especially  from 
1860  to  1880,  are  filled  with  cases  where  municipalities  have 

1  See  a  list  of  cases  sustaining  such  aid  in  Dillon's  Mun.  Corps.,  3d 
Ed.,  Sec.  453,  Note. 

2  Thomas  v.  Pt.  Huron,  27  Mich.,  320  (1873),  where  the  former  cases 
are  cited  to  the  same  effect. 

In  Pine  Grove  Tp.  v.  Talcott,  19  Wall.,  666  (1873),  the  U.  S.  Supreme 
Court  refused  to  follow  the  Michigan  decisions,  which  held  such  aid  un- 
constitutional, at  least  as  to  bonds  issued  before  the  state  decisions  were 
rendered.  This  case  was  argued  for  plaintiff  in  error  by  J.  A.  Garfield. 

In  Iowa  in  1853  (Dubuque  Co.  v.  D.  &  P.  R.  R.,  4  Green  i,)  the 
majority  of  the  court  affirmed  the  validity  of  the  railroad  aid  acts. 

Later,  in  1859  (Stokesy.  Scott  Co.,  10  Iowa,  166),  and  in  a  half  dozen 
subsequent  cases,  the  earlier  cases  were  overruled  and  such  aid  decided 
to  be  unconstitutional.  In  1870  (Stewart  v.  Polk  Co.,  30  Iowa,  9),  and 
again  in  1877  (Renshaw  v.  D.  &  N.  W.  R.  R.,  47  Iowa,  511)  the  validity 
of  such  acts  was  again  recognized. 

3  Besides  the  federal  courts,  the  courts  of  at  least  thirty-one  states 
have  recognized  the  validity  of  such  bonds. 


FOR    WHAT    PURPOSE    BOXDS   MAY    BE    ISSUED.  21 

attempted  to  avoid  the  payment  of  this  class  of  bonds.  It  is  not 
surprising  that  municipalities  have  resisted  the  payment  of 
bonds,  issued  perhaps  under  misrepresentations,  in  anticipation 
of  benefits,  usually  largely  overestimated,  or  in  aid  of  roads  never 
built.  The  effects,  though  disastrous  to  many  western  munic- 
ipalities, have  been  to  create  a  growing  conservatism  on  the 
subject  of  contracting  municipal  indebtedness,  and  increasing 
the  statutory  and  constitutional  restrictions  in  the  issue  of  such 
bonds,  and  in  many  states  absolute  constitutional  prohibitions 
against  the  granting  of  aid  in  any  form  to  railroad  or  other  simi- 
lar corporations.  We  think  it  is  evident  that  the  evils  complained 
of  have  arisen,  not  so  much  from  the  principle,  as  from  its  abuse, 
and  the  remedy  lies  with  the  legislature,  and  in  increased  consti- 
tutional limitations.  As  the  special  need  for  such  aid  grows  less 
or  ceases  to  exist,  the  necessary  limitations  will  be  made,  as 
has  been  done  in  most  of  the  older  states. 

29.  Private  Purposes — Bonds  to  Aid  Manufacturing: 
— It  has  been  decided  in  a  number  of  cases  that  it  is  not  within 
the  power  of  legislatures  to  authorize,  or  of  municipalities  to 
issue,  bonds  or  levy  taxes  to  aid  private  manufacturing  enter- 
prises. In  Maine,  bonds  issued  by  the  town  of  Jay,  under 
legislative  authority,  to  encourage  manufacturing  by  securing 
the  location  of  a  new  saw  mill  and  box  factory  therein,  were 
declared  void  on  the  ground  that  the  purpose  for  which  they 
were  issued  was  private.1  The  Kansas  Act  of  1872  for  the  in- 
corporation of  cities  of  the  second  class  in  that  state,  provided, 
among  other  things,  that  the  municipality  should  ' '  have  power 
to  encourage  the  establishment  of  manufactories  and  such  other 
enterprises  as  may  tend  to  develop  and  improve  such  city." 
The  cities  of  Topeka  and  lola  issued  bonds  for  the  purpose  of 
aiding  in  the  establishment  of  shops  for  the  manufacture  of 
bridges  in  such  cities.  The  bonds  were  held  void  for  the  same 
reason.2  The  U.  S.  Supreme  Court  held  invalid  bonds  issued  to 

1  Allen  v.  Inhabitants  of  Jay,  60  Me.,  124. 

2  Nat'l  Bank  of  Cleveland  v.  City  of  lola,  gth  Kan.,  689. 
Savings  and  Loan  Assoc'n  v.  Topeka,  aoth  Wall.,  655  (1875). 
Coin  1  Nat'l  Bank  of  Cleveland  v.  lola,  reported  in  Bk.  22. 
I*,  C.  P.  Co.,  U.  S.  Repts.,  463  (1875). 


22  FOR   WHAT   PURPOSE    BONDS   MAY    BE    ISSUED. 

aid  in  the  erection  of  foundry  and  machine  shops  in  the  city  ol 
Parkersburg,  West  Virginia.1  In  Illinois  the  city  of  Kankakee 
issued  bonds,  as  a  donation  to  the  Douglas  Linen  Company,  to 
enable  it  to  engage  in  the  manufacture  of  linen  thread  and 
other  fabrics.  The  bonds  were  held  void  by  the  Illinois 
Supreme  Court.2  The  same  court  declared  as  invalid  a  tax 
levied  to  pay  ' '  rolling  mill  bonds, ' '  issued  to  aid  a  private 
manufacturing  company.3 

30.  La  Grange  Case: — The  question  was  again  before  the 
U.  S.  Supreme  Court  in  a  recent  case  (1885)  from  Missouri.4    By 
its  charter  the  city  of  L,a  Grange  was  authorized  to  donate  or 
subscribe  to  the  capital  stock  of  any  manufacturing  company, 
or  for  the  securing  and  maintenance  of  any  manufacturing  com- 
pany, on  certain  conditions.     For  the  purpose  of  securing  the 
location  and  establishment  of  a  rolling  mill,  the  city  donated 
certain  land  and  $200,000  in  city  bonds  to  the  L,a  Grange  Iron 
and   Steel   Companj\     In   an   opinion   declaring  such   bonds 
invalid,  the  court  say,  "The  general  grant  of  legislative  power 
in  the  constitution  of  a  state  does  not  enable  the  legislature, 
in  the  exercise  either  of  the  right  of  eminent  domain  or  of  the 
right  of  taxation,  to  take  private  property,  without  the  owner's 
consent,  for  any  but  a  public  object.     Nor  can  the  legislature 
authorize  counties,   cities   or  towns   to   contract,    for  private 
objects,  debts  which  must  be  paid  by  taxes.     It  cannot,  there- 
fore, authorize  them  to  issue  bonds  to  assist  merchants  or  man- 
ufacturers, whether  natural  persons  or  corporations,   in  their 
private  business.     These  limits  of  the  legislative  power  are  now 
too  firmly  established  by  judicial  decisions  to  require  extended 
argument  upon  the  subject." 

31.  Ottawa     Cases — Municipal    Recital: — The     city     of 

1  City  of  Parkersburg  v.  Brown,  U.  S.  487  (1883). 

2  Bissell  v.  City  of  Kankakee,  64  Ills.,  249(1872). 

3  English  v.  People,  96  111.,  566  (1880). 

Also  see  Weismer  v.  Village  of  Douglas,  64  N.  Y.,  91. 

Curtis  v.  Whipple,  24  Wis.,  350  (aid  to  private  educational  institute 

void). 
Weeks  v.  Milw.,  10  Wis.,  242  (exemption  of  hotel  from  taxation 

void). 
*  W.  O.  Cole  v.  City  of  La  Grange,  113,  U.  S.  i. 


FOR    WHAT    PURPOSE    BONDS    MAY    BE    ISSUED.  23 

Ottawa  was  authorized  to  provide  for  the  payment  of  its  debts, 
and  upon  a  vote  of  the  people,  to  borrow  money  and  issue 
bonds.  In  1869,  under  an  ordinance  passed  and  approved  by 
a  popular  vote,  bonds  of  the  city  were  issued,  the  proceeds  to 
be  expended  in  developing  the  natural  advantages  of  the  city 
for  manufacturing  purposes.  By  a  subsequent  ordinance  the 
mayor  was  directed  to  issue  the  bonds  and  deliver  them  to  one 
Cushman,  "to  be  used  by  him  in  developing  the  natural 
resources  and  surroundings  of  the  city,"  and  authorizing  him 
to  expend  the  same  in  improving  the  water  power  of  the 
Illinois  and  Fox  rivers  within,  or  in  the  vicinity  of  such  city. 
The  bonds  were  issued  and  delivered  to  Cushman,  under  his 
written  agreement  to  cause  the  necessary  works  to  be  completed, 
as  specified,  within  a  reasonable  time,  and  if  not  to  return  the 
bonds  or  a  part  thereof.  The  bonds  recited  that  they  were  issued 
under  the  charter  power  of  the  city  to  borrow  money  and  issue 
bonds,  and  under  ordinances  providing  "for  a  loan  for  municipal 
purposes."  Some  of  the  bonds  came  before  the  U.  S.  Supreme 
Court  in  the  case  of  Hackett  v.  Ottawa,1  in  1879,  when  the  city 
was  held  liable  on  the  ground  that  the  recital  therein,  that  they 
were  issued  under  ordinances  providing  for  a  loan  for  munic- 
ipal purposes,  constituted,  under  the  circumstances,  an  estop- 
pel which  would  prevent  the  city  from  showing  otherwise,  as 
against  a  bona  fide  holder,  as  the  plaintiff  in  that  case  was.  In 
1882,  some  of  the  same  bonds  were  again  before  that  court  in  the 
case  of  the  City  of  Ottawa  v.  First  National  Bank  of  Portsmouth,2 
and  the  validity  of  the  bonds  in  the  hands  of  the  plaintiff  bank 
was  sustained  on  the  same  grounds. 

32.  But  later,  in  the  case  of  the  City  of  Ottawa  v.  Carey,3 
the  bonds  were  declared  to  be  invalid,  the  holder  in  that  case 
having  taken  them  with  knowledge  of  the  circumstances  under 
which  they  were  issued.  This  last  case  was  submitted  and 
decided  in  1882,  the  opinion  declaring  the  bonds  invalid,  being 
given  by  Justice  Harlan,  but  this  judgment  was  rescinded,  and 
the  case  re-submitted  and  decided  in  1883,  the  opinion  of  the 
court,  by  Chief  Justice  Waite,  again  declaring  the  bonds  invalid. 
1  99  U.  S.,  86.  2  105  U.  S.,  342.  3  108  U.  S.,uo. 


24  FOR   WHAT   PURPOSE    BONDS    MAY    BE    ISSUED. 

The  former  opinion  appears  to  have  been  based  on  the  failure  of 
Cushman  to  perform  his  agreements,  in  consideration  of  which 
the  bonds  were  issued.  In  the  latter  opinion  it  is  strongly  inti- 
mated that  the  purpose  for  which  the  bonds  were  issued  was 
not  a  corporate  purpose,  but  the  court  held  that  the  facts 
did  not  require  a  decision  on  that  question.  It  was  clear 
that  bonds  could  not  be  issued  for  the  purpose  indicated  with- 
out express  authority,  which  in  this  case  was  not  claimed 
except  as  it  existed  under  the  general  power  to  borrow  money 
and  issue  bonds.  ' '  It  has  been  over  and  over  again  held,  as 
often  as  the  question  was  presented,  that,  unless  a  specific 
power  was  granted,  all  such  subscriptions  and  all  such  dona- 
tions, as  well  as  the  corporate  bonds  issued  for  their  payment, 
wrere  absolutely  void,  even  as  against  bona  fide  holders  of  the 
bonds. ' '  The  special  grounds  upon  which  the  last  opinion  was 
rested,  was  that  as  between  Cushman  and  the  city  the  bonds 
were  illegal  and  void,  and  the  holder  in  that  case  had  bought 
with  full  knowledge  of  all  the  facts,  and  occupied  no  better 
postion  than  Cushman,  but  the  language  quoted  would  intimate 
an  intention  to  overrule  the  former  Ottawa  cases. 

33.  Bonds  for  Internal  Improvements  : — Nebraska, 
and  possibly  other  states,  have  statutes  authorizing  the  issue  of 
bonds  in  aid  of  internal  improvements.  Considerable  litigation 
has  arisen  as  to  what  purposes  were  included  within  this  class 
of  improvements.  In  Kansas,  where  another  statute  declared 
all  custom  grist-mills  to  be  public  mills,  such  mills,  whether 
run  by  steam  or  water  power,  were  held  to  be  internal  improve- 
ments, and  public  purposes  for  which  bonds  could  be  issued.1 
This  decision,  however,  appears  to  have  been  based  upon  the 
right  of  the  legislature  to  regulate  the  charges  of  such  mills 
under  the  law  of  that  state.  Under  the  Nebraska  law  a  steam 
grist-mill  was  held  not  to  be  a  work  of  internal  improvement, 
in  aid  of  which  bonds  could  be  issued,2  but  that  bonds  issued 
to  aid  a  company  in  improving  the  water  power  of  the  river  for 
the  purpose  of  propelling  grist-mills,  were  issued  for  a  work  of 

1  Burlington  v.  Beasley,  94  U.  S.,  310  (1877). 

2  Osborne  v.  Adams,  106  U.  S.,  181,  and  109  U.  S.  i,  (1883). 


FOR    WHAT    PURPOSE    BOXDS    MAY    BE    ISSUED.  25 

internal  improvement,  within  the  meaning  of  the  statute  of  that 
state,  and  were  valid. '  Among  other  works  of  internal  improve- 
ment for  which  bonds  may  be  issued,  the  Nebraska  Supreme 
Court  has  decided,  or  suggested,  public  bridges,  railroads, 
turnpikes,  canals  and  similar  enterprises,  not  objects  of  private 
concern  purely.2  A  courthouse  is  not  a  work  of  internal 
improvement  under  that  law.3 

34.  Other  Private  Purposes  : — The  legislature  of  Kan- 
sas at  a  time  when  there  was  a  failure  of  crops,  authorized  the 
raising  of  money  by  the  sale  of  bonds  for  the  purpose  of 
making  loans  to  destitute  citizens;  to  provide  them  with  provis- 
ions and  grain  for  seed  and  feed.  The  Supreme  Court  of  that 
state  decided  that  the  purpose  for  which  the  loans  were  made 
was  not  a  public  purpose.4  After  the  great  Boston  fire  in  1872, 
the  legislature  authorized  the  issue  of  bonds  by  the  city  for  the 
purpose  of  aiding,  by  loan,  the  owrners  of  land  in  rebuilding 
their  destroyed  improvements.  The  Supreme  Court  of  Massa- 
chusetts declared  the  act  of  the  legislature  to  be  unconstitu- 
tional.5 In  all  of  the  foregoing  cases,  especially  those  in  which 
bonds  were  issued  for  the  encouragement  and  development  of 
manufactories  within  the  cities  issuing  the  bonds,  it  was  strenu- 
ously argued  that  the  benefits  derived  by  the  municipality  were 
such  as  to  make  the  purpose  sufficiently  public  to  support  the 
exercise  of  the  power  of  taxation.  It  was  not  denied  that  the 
enterprises  aided  would  have  increased  the  material  growth 
and  prosperity  of  the  cities,  and  have  added  a  larger  tax-pay- 
ing element  thereto;  but  the  same  may  be  said  of  any  other 
business  pursuit  which  employs  capital  or  labor.  No  line 
could  be  drawn  in  favor  of  those  objects  which  would  not  open 
the  public  treasury  to  the  importunities  of  two-thirds  of  the 
business  men  of  the  city  or  town.8 

1  Blair  v.  County  of  Cumin g,  in  U.  S.,  363  (1884). 

2  State  v.  Thomas,  9  Neb.,  458  (1880);  also  see  4  Neb.,  156;  7  Neb., 
260;  14  Neb.,  327;  15  Neb.,  568. 

'«  10  Neb.,  281. 

4  State  v.  Osawkee,  14  Kans.,  418. 

5  Roe  v.  Boston,  in  Mass.,  454. 

6  2oth  Wall.,  665,  opinion  of  Justice  Miller. 


26  FOR    WHAT    PURPOSE    BONDS    MAY    BE    ISSUED. 

35.  Purpose — How  Determined  : — A  determination  of 
the  question,  whether  or  not  a  purpose  is  sufficiently  public  to 
support  taxation,  must  be  influenced  more  or  less  by  circum- 
stances.    What  may  be  a  public  purpose  in  one  section  of  the 
country,  under  certain  conditions,  might  not  be  in  another,  under 
different  conditions.     To  illustrate,  while  the  country  was  new 
and  capital  not  easily  attainable  for  the  erection  of  saw-mills  and 
grist-mills,  which  were  a  public  necessity,  it  wyas  essential  that 
the  government  should  offer  inducements  to  parties  who  would 
supply  such  mills.     Before  steam  came  into  general  use,   water 
was  almost  the  sole  reliance  for  motive   power,   and   public 
assistance  was  frequently  necessary  to  obtain  and  improve  such 
water  power  by  exercising  the  right  of  eminent  domain  and 
otherwise.     The  reason  for  such  public  aid  or  encouragement 
having  largely  ceased  with  the  introduction  of  steam  power  and 
the  progress  of  improvements,  there  would  appear  to  be  no  longer 
the  necessity  for  that  class  of  laws,  and  purposes  which  at  one 
time  may  have  been  rightfully  deemed  public  would  now  seem 
to  be  merely  private,  and  therefore  not  subject  to  public  aid  by 
taxation  or  otherwise.     Public  policy  must  affect  largely  the 
determination  as  to  what  is  a  public  purpose  for  which  this 
power  of  taxation  may  be  exercised.     The  determination  may 
be  said  to  be  furnished  not  so  much  by  the  law,  as  by  circum- 
stances, or  public  policy  and  political  economy.1 

36.  Where  does  such  determination  rest  ?     In  some  of  the 
earlier  cases  it  was  intimated  that  the  legislature  was  the  exclu- 
sive judge  as  to  the  purposes,  for  which  the  power  of  taxation 
should  be  exercised,   and  that  there  was  no  means  of  avoiding 
a  legislative  act  for  a  purpose  deemed  by  the  legislature  to  be 
public,  by  an   appeal   to  the  courts.2    This  idea   is   clearly 
erroneous.     It  may   be  stated   as  a    fundamental    principle, 
usually  embodied  in  a  constitutional  form,  that  private  prop- 
erty cannot  be  taken  by  taxation  or  otherwise  for  a  strictly 
private  purpose.     This  provision  or  principle  exists  as  a  limita- 

1  Jones'  Railroad  Securities,  Sec.  228,  Perry  v.  Keene,  56  N.  H.  514. 

2  Coler's  Municipal  Bonds,  Vol.  I,  p.  50,  and  cases  cited. 


FOR    WHAT    TURPOSE   BONDS    MAY    BE   ISSUED.  27 

tion  on  the  power  of  the  legislature,  and  such  limitation  would 
not  be  effective,  if  the  legislature  was  to  be  the  judge  of  its  own 
infraction  of  such  constitutional  or  fundamental  law.  The 
question  is  undoubtedly  one  for  judicial  decision,  but  as  in  all 
similar  limitations,  an  act  of  the  legislature  in  any  such  case 
will  not  be  declared  unconstitutional  or  void,  except  there 
appears  to  be  a  clear  violation  of  the  principle.  The  rule  laid 
down  by  Judge  Cooley  in  the  exercise  of  the  right  of  eminent 
domain  is  applicable  to  the  question  under  consideration. 
' '  The  reason  "of  the  case,  and  the  settled  practice  of  free 
governments,  must  be  our  guides  in  determining  what  is,  or  is 
not,  to  be  regarded  as  public  use;  and  that  only  can  be  con- 
sidered such  where  the  government  is  supplying  its  own  needs, 
or  is  furnishing  facilities  for  its  citizens  in  regard  to  those  mat- 
ters of  public  necessity,  convenience,  or  welfare,  which,  on 
account  of  their  peculiar  character,  and  the  difficulty — perhaps 
impossibility — of  making  provision  for  them  otherwise,  it  is 
alike  proper,  useful,  and  needful  for  the  government  to 
provide."1 

1  Cooley  Constitutional  Limitations,  530  et  seq.,  175;  People  v.  Mor- 
ris, 13  Wend.  328. 


CHAPTER  IV. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

37.  Limitations  on  Municipal    Indebtedness  : — The 
constitutions  of  many  of  the  states  contain  limitations  on  the 
amount  of  indebtedness  which  may  be  contracted  by  municipal- 
ities, the  amount  of,  or  purpose  for  which  municipal  bonds  may 
be  issued,  or  other  provisions  relating  to  or  affecting  the  issue 
of  such  bonds.     As  such  provisions  restrict  and  control  both 
the    municipality    and    the    legislature,    they    are    of   great 
importance    in    a    consideration    of   the    law     of    municipal 
bonds.     To   prevent   the   dangers   of   extravagant  municipal 
bonding,  a  number  of  the  states  have  recently  incorporated  in 
their  constitutions  limitations  on  the  amount  of  indebtedness 
which  may  be  incurred  by  the  municipal  corporations  therein. 
In  Indiana  no  political  or  municipal  corporation  can  become 
indebted,  in  any  manner  or  for  any  purpose,  to  an  amount 
exceeding,  in  the  aggregate,  two  per  cent  of  the  taxable  prop- 
erty therein,   as  shown  by  the  last  general  assessment.     In 
Illinois,  Iowa,  Wisconsin  and  West  Virginia,  such  indebted- 
ness is  limited  to  five  per  cent  of  the  taxable  property  of  any 
municipality,  ascertained  in  the  same  manner.     In  Missouri 
the  limitation  is  five  per  cent,   except  in  case  of  indebtedness 
to  provide  a  courthouse  or  jail,  but  the  limitation  in  this  state 
is  computed  on  the  assessment  next  before  the  last.     Colorado, 
Minnesota,  Nebraska,  and  some  of  the  other  states,  have  limita- 
tions, either  general  or  special,  on  the  same  subject.     By  act  of 
Congress  of  1886,  municipal  indebtedness  within  the  territories 
is  limited   to   four  per  cent  of  the  taxable  property   of  any 
municipality,  as  shown  by  the  last  previous  general  assessment, 
and  all  obligations  in  excess  of  such  limitation  is  declared  to 
be  void. 

38.  Constitutional  Provisions  Prospective  : — All  con- 
stitutional limitations  on  municipal  indebtedness  are  construed 

(28) 


CONSTITUTIONAL   LIMITATIONS    AND    PROVISIONS.  29 

so  as  to  affect  only  the  future  indebtedness.  They  cannot  affect 
the  existing  indebtedness,  although  it  may  be  in  excess  of  the 
prescribed  constitutional  limitation.  It  is  a  fundamental  prin- 
ciple that  an  existing  contract  cannot  be  impaired  by  a  consti- 
tutional provision.  Where  powers  have  been  delegated  to 
municipalities,  and  the  constitutional  limitation  prohibits  the 
legislature  from  granting  such  powers,  the  prohibition  does 
not  affect  those  already  granted.  The  constitutional  limitation 
applies  only  to  the  future  action  of  the  legislature.  When, 
however,  the  prohibition  is  against  the  exercise  of  the  power 
by  the  municipalities,  the  constitution  operates  at  once.  If  the 
power  has  not  been  exercised,  the  subscription  or  other  author- 
ized act  completed,  so  as  to  constitute  a  contract,  the  constitution 
operates  so  as  to  prohibit  all  further  action  under  the  former 
power.1 

39.  It  is  well  settled  that  any  bonds  issued  or  indebted- 
ness contracted  in  excess  of  the  constitutional  limitation  is 
absolutely  void.  Municipal  corporations  have  no  inherent 
power  to  issue  such  obligations.  Such  power  must  proceed  from 
positive  enactment  in  some  form.  Every  person  is  bound  to 
take  notice  of  the  limitations  on  such  power  or  its  exercise. 
All  persons  dealing  with  such  corporations  are  bound  to  know 
the  existence  of  any  constitutional  limitation  affecting  its  powers 
to  contract.  A  question  frequently  arising  under  the  above 
prohibitions  is  as  to  what  constitutes  an  indebtedness  within  the 
meaning  of  such  limitations.  As  usually  construed  under  most 
of  the  state  constitutions,  these  limitations  include  every  form 
of  municipal  indebtedness.  However,  warrants  or  orders 
drawn  against  funds  in  the  hands  of  the  municipality,  or  payable 
exclusively  from  current  assessments  already  levied,  have  gen- 
erally been  held  as  not  to  constitute  an  indebtedness  within  the 
meaning  of  these  limitations.2 

1  Burroughs,  Public  Securities,  489;  County  of  Scotland  v.  Thomas, 
94  U.  S.,  682;  Henry  County  v.  Nicolay,  95   U.  S.,  624;  Rails  County  v. 
Douglass,  103  U.  S.,  730;  Greene  County  v.  Conness,  109  U.  S.,  104;  State 
v.  Town  of  Clark,  23  Minn.,  422. 

2  Dillon's  Municipal  Corporations,  3d  Ed.,   \  136;  Dively  v.  Cedar 
Falls,  37  Iowa,  227;  Grant  v.  Davenport,  36  Iowa,  396;  Law  v.  People,  87 
111.,  400;  Fuller  v.  Heath,  89  111.,  296. 


3O  CONSTITUTIONAL   LIMITATIONS    AND    PROVISIONS. 

40.  Municipal  Contracts  Payable  in  Installments — 
Indiana  Case: — In  Indiana  it  has  been  held  that  a  contract 
with  a  water  work's  company  to   pay  six  thousand  dollars 
a  year  for  twenty  years  for  water  furnished  the  city,  did  not, 
in  the  aggregate,  constitute  an  indebtedness  within  the  mean- 
ing of  the  constitutional  limitation  in  that  state.      In  that 
case'  the  court  held  that  the  limitation  did  not  apply  to  such 
indebtedness  incurred  for  water,  to  be  paid  for  as  the  water  was 
furnished,  provided  the  contract  price  could  be  paid  from  the 
current  revenues,  as  the  water  is  furnished,  without  increasing 
the  corporate  indebtedness  beyond  the  constitutional  limit,  or 
encroaching  upon  funds  set  apart  for  other  purposes.     ' '  The 
items  of  expenses  essential  to  the  maintenance  of  corporate 
existence,  such  as  light,  water,  labor  and  the  like,   constitute 
corporate  expenses,  payable  out  of  current  revenues,  and  where 
the  current  revenues  are  sufficient  to  discharge  all  such  current 
expenses  without  increasing  the  indebtedness  of  the  city,  there 
is  no  corporate  debt  incurred  for  such  expenses. ' '     There  would 
be  no  corporate  indebtedness  until  the  water  was  furnished  or 
other  sendee  performed  under  the  contract.     It  would  appear 
to  be  otherwise,  if  bonds  or  other  evidences  of  indebtedness 
were  issued. 

41.  Iowa: — The  Iowa  Supreme  Court,  in  considering  a 
similar  contract  to  supply  the  city  of  Davenport  with  water, 
held  that  where  a  contract  made  by  a  municipal  corporation 
pertains  to  its  ordinary  expenses,  and  is,  together  with  other 
like  expenses,  within  the  limit  of  its  current  revenues  and  such 
special  taxes  as  it  may  legally  levy,  and  in  good  faith  intends 
to  levy  therefor,  such  contract  does  not  constitute  ' '  the  incur- 
ring of  indebtedness ' '  within  the  meaning  of  the  constitutional 
provision  limiting  the  power  of  municipal  corporations  to  con- 
tract debts.2 

42.  Illinois: — In  Illinois  the  city  of  East  St.  lyouis   made 
a  contract  for  gas,  agreeing  to  pay  a  certain  price  per  lamp  for 


1  City  of  Valparaiso  v.  Gardner,  97  Ind.,  I 

2  French  v.  City  of  Burlington,  42  Iowa,  614  ;  Grant  v.  Davenport, 
36  Iowa,  396  ;  Burlington  Water  Company  v.  Woodward,  49  Iowa,  58. 


CONSTITUTIONAL   LIMITATIONS    AND   PROVISIONS.  31 

a  period  of  thirty  years.  The  amount  payable  in  one  year 
would  not  increase  the  city's  indebtedness  beyond  the  five  per 
cent  limitation.  It  was  argued  that  the  contract  price  in  the 
aggregate  constituted  an  indebtedness  within  the  meaning  of 
the  constitution.  The  court  held  to  the  contrary.1  There  was 
no  indebtedness  in  advance  of  anything  being  furnished,  but 
indebtedness  arose,  as  gas  should  be  furnished.  When  the 
company  has  furnished  the  gas  for  a  certain  month,  the  price 
being  payable  monthly,  then  there  is  a  liability,  an  indebted- 
ness arises,  and  not  before.  Hence  the  amount  that  might 
become  due  and  payable  under  the  contract  in  future  years  did 
not  constitute  a  debt  against  the  city  at  the  time  of  making 
the  contract.  The  Supreme  Court  of  the  same  state  subse- 
quently in  1883,  in  a  case2  where  the  city  of  Quincy  had 
entered  into  a  contract  for  the  construction  and  operation  of  a 
system  of  waterworks,  and  agreed  to  pay  for  the  use  of  water 
by  the  city  $2,600  per  month,  for  a  period  of  thirty  years,  it 
appearing  that  the  city  at  the  time  of  making  the  contract,  was 
already  indebted  in  excess  of  the  constitutional  limitation,  held 
the  contract  void.  The  plaintiff  claimed  that  the  money 
sought  to  be  recovered  pertained  to  the  ordinary  expenses  of 
the  city,  and  that  the  contract  price,  under  the  terms  of  pay- 
ment, together  with  other  ordinary  expenses  of  such  city,  were 
within  the  limits  of  the  current  revenues  of  the  city.  The 
court  held  that  this  claim  did  not  afford  a  sufficient  answer;  that 
under  the  language  of  the  Illinois  constitution  it  would  be  a 
gross  absurdity  to  say  that  the  limitation  did  not  include 
indebtedness  for  supplies  to  meet  a  city's  ordinary  wants  and 
necessities.  The  court  further  said  that  in  the  East  St.  L,ouis 
case  above,  a  recovery  was  permitted  only  because  it  did  not 
affirmatively  appear  that,  at  the  time  the  gas  was  furnished,  the 
city  was  indebted  beyond  the  constitutional  limit.  In  another 
case  that  court  has  said,  "  The  purpose  of  the  debt  is  expressly 
excluded  from  consideration:  It  can  make  no  difference  whether 

1  City  of  East  St.  Louis  v.  East  St.  Louis  Gas  Company,  98  Ills.  430 
(1881). 

2  Prince  v.  City  of  Quincy,  105  Ills.  138  (1883). 


32  CONSTITUTIONAL   LIMITATIONS   AND    PROVISIONS. 

the  debt  be  for  necessary  current  expenses  or  for  something 
else."1 

43.     Special  Assessment  Bonds  : — There  is  a  class  of 
bonds,  of  which  a  large  amount  have  been  recently  issued,  and 
which  apparently  are  becoming  very  popular  with  municipali- 
ties.    They    may   be  denominated  special  assessment  bonds. 
They  are  usually  bonds  issued  to  pay  for  local  improvements,  in 
anticipation  of  special  assessments  levied  against  the  lands  or 
property  benefited  by  such  improvement.     City  improvement 
bonds  authorized  in  anticipation  of  sewer,   paving  and  other 
assessments   in   Nebraska   and  Iowa,   and  the  road  bonds  in 
Indiana  and  Ohio,   are  examples  of    this   class   of  municipal 
bonds.     Several  important  questions  arise  in  connection  with 
their  issue.     Are  they  a  general  liability  of  the  city  or  county 
by  which,  or  in  the  name  of  \vhich,  they  are  issued,  or  must  they 
be  collected  exclusively  from  the  special  assessments  in  anticipa- 
tion of  which  they  are  issued  ?     This  question  affects  both  the 
value  of  the  bonds  to  the  purchaser,  and  in  those  states  where 
municipal    indebtedness   is    limited,    the   amount  which    the 
municipality  can  issue.     We  understand  the  general  rule  of  law 
to  be,  that  where  such  bonds  are  issued  in  the  name  of  the 
city  or  county,   if  there   is  nothing   to   the   contraiy   clearly 
expressed   in  the  act  authorizing  the  issue,  or  in  the  bonds 
themselves,    they    constitute    a    general    municipal   liability, 
although  payable  from  special  assessments  against  the  property 
benefited.     The  municipality  is  primarily  liable  for  the  pay- 
ment of  the  bonds,  but  has  the  right  to  insist  on  being  reim- 
bursed from  such  special  assessments.     We   think  this  rule 
correct  in  principle,  and  borne  out  by  nearly  all  of  the  decisions. 
44.     Ohio : — An  Ohio  case  is  in  point.     County  Commis- 
sioners in  that  state  were  authorized  to  construct  roads,  on  the 
petition  of  a  majority  of  the  resident  land  owners  along  and 
adjacent  to  such  road.     To  pay  the  expense  of  such  improve- 
ment, all  lands  within  two  miles  were  assessed,   and  county 
bonds  were  authorized  to  be  issued  in  anticipation  of  the  collec- 
tion  of   such   assessment.     The  commissioners   of   a  certain 
1  City  of  Springfield  v.  Edwards,  84  Ills.  626  (1877). 


CONSTITUTIONAL   LIMITATIONS   AND   PROVISIONS.  33 

county  received  a  petition  asking  for  the  establishment  of  a 
road,  under  the  provisions  of  this  act,  which  was  done  and 
bonds  issued.  After  the  bonds  had  been  sold  a  perpetual 
injunction  was  granted  by  the  Supreme  Court  against  the  levy 
of  the  assessment,  on  the  ground  of  irregularity  in  the  prelim- 
inary proceedings  relating  to  such  levy.  In  a  suit  on  the  bonds, 
the  county  was  held  liable  for  their  payment  to  a  bona  fide 
holder,  and  a  writ  of  mandamus  was  issued  for  the  levy  of  a 
general  tax  on  the  property  of  the  county  to  make  such  pay- 
ment. It  was  held  that  as  between  the  county  and  the  bene- 
fited district  the  burden  of  the  improvement  should  be  borne 
by  the  district  improved,  but  between  the  county  and  the  holder 
of  the  bonds,  the  county  was  liable.1 

45.  Kansas  : — In  the  case  of  the  special  sidewalk  bonds 
issued   by   the  city   of  Wyandotte,  hereinbefore   referred   to, 
while  the  act  under  which  the  improvement  was  made  provided 
that  payment  therefor  should  be  made  by  special  assessments 
on  the  adjacent  property,  the  court  held  that  the  indebtedness 
constituted  a  general  liability  against  the  city.     It  was  therein 
held  that  the  statutory  provisions  as  to  special  assessments 
against  the  abutting  property  related  to  the  ultimate  liability 
therefor,  for  the  purpose  of  reimbursing  the  city  for  the  amount 
paid   for  such  improvement,   a  question,   as   the   court  said, 
between  the  city  and  the  lot  owners  benefited,  and  with  which 
the  contractors  or  his  assignees  had  nothing  to  do,  but  that  the 
city  was  liable  primarily  and  was  bound  to  pay  the  debt  with- 
out regard  to  the  collection  of  such  special  assessment.2 

46.  Ft.  Scott  Case:— The  city   of   Ft.  Scott,  Kansas,   a 
city  of  the  second  class  in  that  state,  under  the   statutory 
authority  conferred  upon  cities  of  that  class,  for  the  purpose  of 
grading,  paving,  guttering  and  macadamizing  one  of  its  streets, 
issued  bonds,  and  provided  by  ordinance  that  they  should  be 
"paid  principal  and  interest,  solely  from  special  assessments 
to  be  made  upon  and  collected  solely  from  the  lots  and  pieces  of 

1  State  v.  Commissioners,  37  Ohio,  526  (1882). 

2  Wyandotte  v.  Zeitz,  21  Kas.,  649  (1879);  Atchison  v.  Byrnes,  22 
Kas.,  68  (1879). 


34  CONSTITUTIONAL    LIMITATIONS    AND    PROVISIONS. 

grounds  fronting  upon,  or  extending  along  the  street,  the  dis- 
tance improved."  The  act  under  which  the  bonds  were  issued, 
provided  that  "for  the  payment  thereof,  assessments  should 
be  made  upon  the  taxable  property  chargeable  therewith," 
that  is,  ' '  upon  all  lots  and  pieces  of  ground  to  the  center  of  the 
block,  extending  along  the  street  or  avenue  the  distance 
improved. ' '  The  bonds  had  printed  upon  their  margin  a  state- 
ment that  they  had  been  issued  in  accordance  with  such  act, 
and  in  pursuance  of  such  ordinance,  describing  the  same.  The 
special  assessments,  collected  under  the  provisions  of  the  ordi- 
nance, proved  insufficient  to  pay  the  bonds  and  interest,  as  they 
became  due,  and  the  city  repudiated  any  obligation  to  pay 
the  bonds,  except  from  such  assessments.  The  U.  S.  Supreme 
Court,  Justice  Harlan  giving  the  opinion,  decided  that  the  city 
was  liable,  and  that  the  council  had  the  power,  and  it  was  their 
duty  to  provide  for  the  payment  of  the  judgment  obtained  on  the 
unpaid  bonds  by  taxation  upon  all  the  taxable  property  within 
the  city,  and  that  the  holder  of  the  bonds  was  entitled  to  a 
mandamus  to  compel  the  levy  of  such  a  tax,  in  case  of  the 
city's  default  so  to  do  ;  that  as  between  the  city  and  the  owners 
of  the  property  liable,  the  payment  of  the  bonds  should  be 
made  by  special  assessment  against  the  property,  but  as 
between  the  city  and  the  holder  of  the  bonds,  the  city  was 
primarily  liable.  ' '  Experience  informs  us  that  the  city  would 
have  met  with  serious,  if  not  insuperable,  obstacles  in  its 
negotiations,  had  the  bonds  upon  their  face,  in  unmistakable 
terms,  declared  that  the  purchaser  had  no  security  beyond  the 
assessments  upon  the  particular  property  improved.  If  the 
corporate  authorities  intended  such  to  be  the  contract  with  the 
holders  of  the  bonds,  good  faith  required  an  explicit  avowal  of 
such  purpose  in  the  bond  itself,  or  in  some  other  form,  by 
language  brought  home  to  the  purchaser,  which  could  neither 
mislead  nor  be  misunderstood."1 

47.     Indiana  Cases : — In  Indiana  the  present  gravel  road 
act  of  1877  authorizes  county  commissioners  to  construct  roads 
and  to  issue  bonds  of  the  county  to  raise  the  required  money 
1  U.  S.  v.  Ft.  Scott,  99  U.  S.,  152  (1879). 


CONSTITUTIONAL   LIMITATIONS    AND    PROVISIONS.  35 

for  the  purpose,  and  to  provide  for  the  payment  of  such  bonds 
by  making  a  special  assessment  against  the  land  adjacent  to 
the  road  improved.  The  question  first  arose  in  the  federal 
court  in  1884,  as  to  whether  the  bonds  issued  under  this  act, 
constituted  an  indebtedness  of  the  count}',  under  the  constitu- 
tional limitation  prohibiting  any  municipal  corporation  from 
becoming  indebted  "in  any  manner  or  for  any  purpose  to  an 
amount  in  the  aggregate  exceeding  two  per  cent  of  the  taxable 
property  within  such  corporation. ' '  Judge  Woods  of  the  U.  S. 
District  Court  for  that  state  held,1  that  such  bonds  constituted  a 
general  liability,  and  were  within  the  constitutional  limitation, 
citing  and  approving  the  Ohio  and  other  cases,  to  the  same 
effect.  The  Indiana  gravel  road  act  is  referred  to,  as  having 
been  copied  substantially  from  the  Ohio  law  on  the  same 
subject,  and  therefore  to  be  construed  under  the  decisions  of 
the  latter  state.  The  position  of  the  federal  court  in  this  case 
would  seem  to  be  supported  by  both  principle  and  authority, 
but  the  state  courts  have  seen  fit  to  hold  otherwise. 

48.  Subsequently  in  1887,  some  of  these  gravel  road  bonds 
were  before  the  state  supreme  court,  in  a  case  that  arose 
from  the  same  county,2  and  that  court,  without  referring  to  the 
federal  case,  decided  substantially  as  follows  :  We  are  of  opin- 
ion that  the  bonds  do  not  constitute  an  indebtedness  of  such 
county,  and  do  not  evidence  an  indebtedness  incurred  by  such 
county,  within  the  inhibition  of  the  constitution.  The  bonds 
are  payable  out  of  a  particular  fund,  raised  by  the  collection  of 
the  special  assessment  made  on  the  land  adjacent  to  such  road, 
' '  divided  in  such  manner  as  to  meet  the  payment  of  principal 
and  interest  on  such  bonds, ' '  and  when  collected  to  "be  applied 
to  no  other  purpose  than  the  payment  of  said  bonds  and  interest. 
No  other  provision  is  made  for  the  payment  of  either  bonds  or 
the  interest  thereon,  and  such  fund  is  pledged  by  the  statute  for 
the  payment  of  such  bonds  and  interest.  *  *  *  *  It  is 
manifest,  we  think,  from  the  provisions  of  the  act,  that  the  legis- 
lature intended  that  the  entire  cost  and  expenses  of  constructing 

1  Kimball  v.  Grant  Co.,  21  Fed.  Rep.  145. 

2  Strieb  v.  Cox,  in  Ind.  299;  Burton  v.  State,  in  Ind.  600. 


36  CONSTITUTIONAL   LIMITATIONS   AND    PROVISIONS. 

any  free  gravel,  macadamized  or  paved  road,  and  all  bonds  of  the 
county,  issued  for  the  purpose  of  raising  the  money  necessary 
to  meet  the  expense  of  such  improvement,  should  be  borne  and 
paid  out  of  the  particular  fund  raised  by  and  from  the  collec- 
tion of  the  assessments,  made  on  the  lands  adjacent  to  such 
road." 

49.  While  conceding  the  correctness  of  the  court's  argu- 
ment that  the  intention  of  the  legislature  was  that  the  expense 
of  tlje  improvement  was  to  be  borne  by  the  benefited  property, 
in  the  absence  of  the  above  authoritative  decision,  our  opinion 
would  be  that  the  bonds  in  question  constitute  an  indebtedness 
of  the  county  within  the  meaning  of  the  constitutional  pro- 
hibition.    The    act    authorizes    the  issue   of   "bonds  of  the 
county,"  and,  while  the  payment  of  the  bonds  was  to  be  made 
from  the  fund  provided  from  the  special  assessments,  it  would 
seem  that  it  was  the  intention  to  lend  the  credit  of  the  county 
to  the  bonds  negotiated,  the  county  having  the  right  to  collect 
such  assessments  in  order  to  meet  the  payment  of  the  bonds. 
Such  we  understand  to  be  the  law  as  to  this  class  of  bonds, 
as  decided  in  all  of  the  other  states  and  courts  where  the  ques- 
tion  has   been   adjudicated.      These   last    Indiana    decisions 
appear  to  have  been  influenced  by  the  necessity  of  the  circum- 
stances, arising   from  the  extremely  low  rate  of  indebtedness 
allowed  under  the  state  constitution,  rather  than  by  precedent. 
Although  we  are  aware  that,  in  the  opinion  of  some  able  law- 
yers, the  law  as  laid  down  by  these  Indiana  cases  is  correct  in 
principle,  and  must  be  adopted  by  other  states,  whose  constitu- 
tions contain  similar  limitations   on  municipal  indebtedness. 
The  large  number  of  such  bonds  now  being  issued  in  states 
having  such  constitutional  limitations  will  probably  result  in  a 
more  settled  adjudication  of  this  important  question  at  an  early 
date. 

50.  Limitations   on   State  Indebtedness — Statutory 
and  Charter  Limitations  : — Many  states  have  in  their  consti- 
tutions, limitations  on  the  amount  of  indebtedness  which  may 
be  incurred  by  the  legislature  or  other  authorities  by  or  in 
behalf  of  such  states.     Such  constitutional  limitations  apply 


CONSTITUTIONAL    LIMITATIONS   AND   PROVISIONS.  37 

only  to  the  state,  and  do  not  limit  or  affect  her  municipal  or 
political  subdivisions.1  Any  charter  or  statutory  limitation  on 
the  amount  of  indebtedness  which  a  municipal  corporation  may 
contract,  is  always  subject  to  repeal  or  modification  by  the  legis- 
lature. This  repeal  may  be  effected  by  a  subsequent  general 
law,  where  it  appears  that  such  was  the  intention  of  the  legis- 
lature.2 

51.  Bonds  Issued  to  Pay  Judgments: — It  has   been 
held  that  city  bonds  issued  to  pay  a  valid  judgment  against 
such  city,  even  where  the  amount  of  the  bonds  was  in  excess  of 
the  constitutional  limit,  were  valid  in  the  hands  of  an  innocent 
holder,  it  being  assumed  in  such  cases  that  all  legal  defenses 
have  been  interposed  by  the  municipality,  at  the  time  the  judg- 
ment  wras   obtained,   and   the  issue  of  such  bonds  does   not 
increase  the  indebtedness  of  the  city.  , 

52.  Over  Issue  of  Bonds  : — All  bonds  issued  or  indebt- 
edness incurred  in  excess  of  the  constitutional  limitation  will, 
as  we  have  seen,  be  absolutely  void,  but  it  frequently  happens 
that  a  part  of  the  issue  is  within  the  limitation,  and  an  inter- 
esting and  important  question  arises  as  to  which  bonds  are 
valid  in  such  a  case.     It  appears  that  the  bonds  first  delivered, 
up  to  the  amount  of  the  limitation,  will  be  held  valid.3     But  in 
case  of  an  issue  of  bonds  dated  and  delivered  at  the  same  time, 
where  it  is  impossible  to  ascertain  which  were   issued   and 
delivered  first,  the  usual  practice  has  been  to  pay  the  bonds  pro 
rata  in  proportion,  as  the  amount  of  bonds  issued,  bear  to  the 
amount  within  the  prescribed  limitation.     There  is  no  presump- 
tion that  the  bond  bearing  the  lowest  number  was  the  first 
issued  or  sold,   but  that  where  there  is  no  proof  as  to  which 
was  first  delivered  the  bonds  will  be  paid  pro  rata.     This  rule 
has  been  applied  in  a  number  of  cases.4 

1  Dillon's  Municipal   Corporations,   3d  Ed.,    $   138;  Sioux  City  v. 
Weare,  59th  Iowa,  95. 

2  Dalton  v.  City  of  Aurora,  114  Ills.,  138  (1885);  Amey  v.  Allegheny 
City,  24  Howard,  373. 

3  Daviess  Co.  v.  Dickinson,  117  U.  S.,  657  (1886). 

-  McPherson  v.  Foster,  43  Iowa,  48.  (1876);  Burroughs  on  Public 
Securities,  p.  24,  and  cases  cited. 


38  CONSTITUTIONAL   LIMITATIONS  AND    PROVISIONS. 

53.  Special  Legislation  :— The  constitutions   of  Ohio, 
Kansas  and  Nebraska,  contain  a  provision  prohibiting  the  legis- 
lature from  passing  any    ' '  special    act    conferring    corporate 
powers."     A  legal  construction  of  this  provision,  as  applied  to 
municipal  corporations,  has  been  the  subject  of  judicial   decis- 
ion in  a  large  number  of  cases.     It  is  settled  that  the  provision 
applies    to   municipal   as  well  as  private  corporations.     The 
general  current  of  the  decisions  is  to  the  effect  that  it  amounts 
to    a    prohibition    against   special  acts  authorizing  municipal 
corporations  to  issue  bonds,  but  that  it  does  not  prevent  such  acts 
as  to  quasi-corporations,  as  counties  and  townships,  although 
they  may  have  been  declared  by  statute  to  be  bodies  corporate. 
However,  the  decisions  have  not  been  entirely  uniform,  some 
of  them  holding  school  districts,  which  had  been  vested  with 
corporate  powers  by  the  statute,  to  come  within  the  prohibition 
mentioned.      A  brief  review  of  a  few  of  the  leading  cases  in 
those  three  states,  will  best  show  the  construction  placed  on  the 
above  clause,  as  held  by  the  courts  of  those  states. 

54.  Nebraska — School  Districts  and  Precincts  : — An  act  of 
the  Nebraska  legislature  authorizing  a  certain  school  district 
to  issue  bonds  for  the  building  of  a  school  house  was  declared 
by  the  supreme  court  of  that  state  to  be  a  special  act  confer- 
ring corporate  powers,  and  therefore  void,  as  repugnant  to  the 
above   provision    in   the  Nebraska  constitution.1     The  U.  S. 
Supreme  Court  decided  to  the  same  effect,  the  opinion  by  Justice 
Miller  holding  that,  as  the  Nebraska  statutes  declared  every 
duly  organized  school  district  to  be  a  body  corporate  possessing 
all  the  usual  powers  of  a  corporation  for  public  purposes,  such 
districts  were  corporations  in  the  fullest  sense  of  the  word,  and 
came  within  the  constitutional  prohibition;  that  a  power  to  issue 
bonds  was  to  be  exercised  by  such  district;  as  a  corporation,  and 
was,  therefore,  a  corporate  power,  and  void,  as  unconstitutional.2 
The  supreme  court  of  the  same  state  has  also  decided  that  an 
act  authorizing  a  precinct  to  issue  bonds  to  aid  in  the  construc- 
tion of  a  courthouse,  was  unconstitutional  for  the  same  reason.3 

1  Clegg  v.  School  Dist.  No.  56,  Richardson  Co. ,  8  Neb.;  178  (1879). 

2  School  Dist.  v.  St.  Joseph   F.  &  M.  Ins.  Co.,  103  U.  S.,  707  (i88i> 

3  Dundy  v  Richardson  Co.,  8  Neb.,  508  (1879). 


CONSTITUTIONAL    LIMITATIONS    AND    PROVISIONS.  39 

55.  A'ebraska — Counties  : — It   has   been   held,    however, 
that  a  county  is  not  a  corporation  under  the  Nebraska  consti- 
tution.1    An  act   of   the  same  state  authorizing  a  county   to 
issue  bonds  for  its  indebtedness  was  held  by  the  U.  S.  Supreme 
Court  as  not  violating  these  provisions  of  the  Nebraska  con- 
stitution.    The  court  gave  several  reasons  for  sustaining  the 
validity    of    the    bonds,    distinguishing   the    cases    from    the 
Nebraska  school  district  cases  already  referred  to,   by  saying 
that  in  this  case  a  debt  already  exists,  and  the  statute  simply 
authorized  a  change  in  the  form  of  the  obligation  by  which  the 
debt  was  evidenced,  that  as  the  statute  operated  upon  a  trans- 
action already  consummated,  only  seeking  to  change  its  char- 
acter and  form,  it  did  not  confer  corporate  powers.     The  court 
further  said,  "  It  is  a  sufficient  answer  to  say  that  the  word 
'  corporate, '  as  used  in   this  section  of  the  constitution,  does 
not  apply  to  a  county, ' '  citing  the  Nebraska  cases  to  that  effect.2 

56.  »  Kansas   Cases — School  Districts — Cities  •' — An   act  of 
the  Kansas  legislature  authorizing  a  specified  school  district  to 
issue  bonds  to  build  a  schoolhouse,  was  held  not  to  conflict 
with  the  provision  in  question  of  the  Kansas  state  constitution.3 
The  court  said  that  school  districts  were  only  quasi-corpora- 
tions,  and  not  corporations,  under  the  meaning  of  such  provis- 
ions,   but   that   cities,    towns   and    villages    were    municipal 
corporations  proper,  and  therefore  included  in  such  prohibition. 
An  act  in  this  state  authorizing  a  single  city  to  issue  bonds 
has  been  held  to  be  a  special  act  conferring  corporate  powers 
and  repugnant  to  the  above   prohibition.4     As   defining   the 
meaning  of  such  provision,  the  Kansas  supreme  court  has  said 
that  any  act  conferring  powers  limited  in  operation  to  a  single 

1  Jefferson  Co.     v.   People,  5  Neb.,  127;  Wood    v.  Colfax  Co.,    10 
Neb.,  552. 

2  Sherman  Co.  v.  Simonds,   109  U.  S.,  765  (1884);  Reed  y.  City   of 
Plattsmouth,  107  U.  S.,  568  (1883).     We  understand  the  court  in  this  case 
to  hold  that  a  special  act  ratifying  and  confirming  city  bonds  issued  with- 
out authority,  but  to  pay  a  just  and  equitable  indebtedness  previously 
existing  against  the  city,  is  not  such  a  conferring  of   corporate  powers 
within  the  meaning  of  this  constitution. 

3  Beach  v.  Leahy,  n  Kas.,  23  (1883). 

4  Com'l   Bk.  of  Cleveland  v.  City  of  lola,  2  Dill.,  C.   C.   R.,  353 
(1873);   Gilmore  v.  Norton,  10  Kas.  491;   State  v.    Maloy,  20  Kas.,  619 
(I878J. 


4O  CONSTITUTIONAL    LIMITATIONS   AND   PROVISIONS. 

city  is  manifestly  a  special  act  conferring  corporate  powers, 
and  void,  as  forbidden  by  the  constitution. 

57.  Ohio  Cases : — In  a  leading  Ohio  case,  the  opinion  of 
a  majority  of  the  court  held  that  the  general  assembly  cannot 
by   special   act   confer   additional   powers   upon    corporations 
already  existing;  that  in  the  purview  of  those  provisions  of  the 
constitution,  there  is  no  distinction  between  private  and  munic- 
ipal corporations,  and  that  the  conferring  on  a  municipal  cor- 
poration of  the  power  of  assessment  and  taxation  was  within 
the  constitutional  prohibition.1     In  a  later  case  the  supreme 
court  of  that  state  declared  that  the  question  whether  powers 
conferred  by  the  legislature  upon  a  common  school  district 
were  corporate  or  not  within  the  meaning  of  the  constitution, 
could  not  be  determined  definitely  by  the  mere  fact  that  such  a 
district,  or  its  board  of  education,  had  been  declared  by  statute 
to  be  a  corporation,  but  rather  by  the  object  of  its  creation, 
and  the  nature  of  its  functions.     After  a  full  consideration  of 
that  case  the  court  said,  "  It  is  quite  obvious  to  us  that  county 
and  township  organizations,  although  quasi-corporations,  are 
not  within  the  meaning  of  those  provisions  of  the  constitution, 
and  upon  a  full  consideration,  we  are  unanimous  in  the  opinion 
that    school    districts,    and    similar    organizations,    although 
declared  by  statute  to  be  bodies  politic  and  corporate,  are  not 
within  the  reason  or  meaning  of  this  inhibition  of  the  consti- 
tution," citing  and  approving  the  Kansas  cases.2 

58.  Ohio  Municipal  Classification  : — In  order  to  avoid  the 
application  of  the  above  and  similar  constitutional  provisions 
relating  to  special  legislation,  a  number  of  the  states  have 
adopted  a  classification  of  their  municipal  corporations  accord- 
ing to  population.     That  of  Ohio  is  more  extensive  than  any 
other  state.     We  understand  the  rule  to  be  in  such  cases  that 
any  act,  the  application  of  which  is  limited  to  one  municipal 
corporation,  and  cannot  by  any  possibility  include  any  other, 
is  a  special  act  and  prohibited  by  the  provisions  in  question,  but 

1  State  v.  Cincinnati,  2oth  Ohio,  18  (1870);  State  v.  Mitchell,  31 
Ohio,  592  (1877). 

2  State  v.  Powers,  38  Ohio,  54  (1882). 


CONSTITUTIONAL    LIMITATIONS    AND    PROVISIONS.  41 

that  an  act,  which  although  only  applicable  to  one  corporation 
at  the  time  of  its  passage,  but  which  may  subsequently  include 
others,  is  not  repugnant  to  such  constitutional  provision.  To 
illustrate,  an  act  authorizing  the  issue  of  bonds  by  all  cities 
containing  over  two  hundred  thousand  population,  as  shown  by 
the  federal  census  of  1880,  could  not  possibly  include  any 
other  city  except  Cincinnati,  but  such  an  act  which  included 
in  its  terms  all  cities,  which  contained  over  two  hundred  thou- 
sand by  such  or  any  subsequent  census,  might  subsequently 
include  other  cities,  and  would  be  sustained  under  the  rule  as 
generally  laid  down  by  the  courts  in  such  cases. 

59.  Ohio  Cases: — An    act   authorizing  any   city   of  the 
second  class,  having  a  population  of  over  thirty-one   thousand 
at  the  last  federal  census  to  levy  a  special  assessment  against 
abutting  property  to  pay  for  city  improvements  and  issue  bonds 
of  the  city  in  anticipation  of  such  assessment,  was  held  by  the 
Ohio  supreme  court  to  be  a  special  act  within  the  meaning  of  the 
constitution,    and   therefore    unconstitutional,    as    conferring 
corporate  powers.     But  in  that  case  the  court  held  the  objectors 
estopped,  on  the  ground  that  they  had  participated  in  the  levy 
of  the  assessment  by  voting  therefor,  receiving  the  benefit  of 
the  improvement,  and  allowing  the  indebtedness  to  be  created, 
and  bonds  to  be  issued,  without  objection,  the  court  holding 
that  the  doctrine  of  estoppel  was  applicable  even  where  the 
indebtedness  was  incurred  under  an  unconstitutional  law.1     In 
another  case  before  the  same  court  an  act  creating  the  office  of 
police  judge,  in  all  cities  having  a  population  of  16,512,  at  the 
last  federal  census,  was  held  to  be  applicable  only  to  the  city 
of  Akron,  and  therefore  unconstitutional,  as  a  special  act  con- 
ferring corporate  powers.2 

60.  Municipal  Subscriptions    and    Donations  : — The 
present  constitution  of  the  following  states  contain  provisions 
prohibiting  the  municipalities  therein  from  becoming  stock- 
holders in  or  granting  public  aid  to  any  association,   corpora- 
tion or  company :     Alabama,    Arkansas,    Colorado,   Florida, 

1  State  v.  Mitchell,  31  Ohio,  592  (1877). 

2  State  v.  Anderson,  44  Ohio,  247  (1886). 


42  CONSTITUTIONAL    LIMITATIONS    AND    PROVISIONS. 

Georgia,  Illinois,  Indiana  (as  to  counties),  Missouri,  New 
Hampshire,  New  York,  Ohio,1  Oregon,  Pennsylvania  and 
Texas.  In  some  of  the  other  states  the  power  to  grant  aid  to 
such  corporations  is  restricted  by  constitutional  provisions.  In 
some  cases,  by  limiting  the  amount  of  such  aid,  and  in  other 
cases,  by  requiring  the  consent  of  a  majority  or  more  of  the 
electors  or  tax-payers.  - 

61.  Other  Constitutional  Provisions  : — In  the  con- 
stitutions of  a  number  of  the  states  will  be  found  a  provision 
that  ' '  in  all  cases  where  a  general  law  can  be  made  applicable 
no  special  law  shall  be  enacted."  The  decided  weight  of 
authority  is  that  it  is  for  the  legislature  to  decide  as  to  when  a 
case  has  arisen  the  purposes  of  which  cannot  be  effected  by  a 
general  law,  and  when  a  special  law  is  required,  and  the  courts 
will  not  interfere  with  the  exercise  of  that  discretion.3  In  the 
states  of  New  York,  Kansas,  Nebraska,  Nevada,  Ohio,  Wis- 
consin and  California,  by  constitution,  it  is  made  the  duty  of 
the  legislature  to  provide  for  the  organization  of  cities  and 
incorporated  villages,  and  to  restrict  their  power  of  taxation, 
assessment,  borrowing  money,  contracting  debts  and  loaning 
their  credit,  so  as  to  prevent  the  abuse  thereof.  This  provision 
has  been  held  not  to  restrict  the  discretionary  powers  of  the 
legislature,  on  the  subjects  mentioned.  While  it  is  the  duty  of 
the  legislature  to  enact  laws  restricting  the  powers  of  such 
municipal  corporations,  it  is  left  solely  to  the  discretion  of  the 
legislature,  as  to  what  restrictions  shall  be  made,  and  how  or 
under  what  circumstances  they  shall  be  imposed.  For  a  gen- 
eral consideration  of  other  constitutional  provisions  relating  to 
the  passage  of  acts  by  the  legislature,  and  the  validity  of  such 
acts,  reference  is  made  to  the  authorities  cited  in  the  note.* 

1  Under  the  Ohio  provisions  (Art.  8,  Sees.  4  and  6)  a  statute  author- 
izing a  city  to  build  an  entire  railroad  as  a  public  work,  was  sustained. 

2  Minn.  Art.   9-15,   (1879);  Tenn.  Art.   2,  Sees.  29-31;  Neb.  Art  2, 
"  Mun.  Corps."  prohibits  subscriptions  to  the  capital  stock,  but  allows 
donations  under  restrictions,  when  authorized  by  vote. 

For  a  general  consideration  of  the  above  provisions  as  applicable  to 
the  granting  of  railroad  aid  by  municipalities,  see  Jones  on  Railroad 
Securities,  Sees.  231  to  266. 

3  Dillon,  Municipal  Corporations,  3d  Ed.  §48. 

4  Cooley  on   Constitutional  Limitations,    130  to  188;  Burroughs  on 
Public  Securities,  406  to  495;  Dillon,  Mun. .Corps.  §$45  to  51. 


CHAPTER  V. 


THE  ISSUE  OF  MUNICIPAL  BONDS. 

62.  Performance  of  Conditions  Preceding  Issue: — 
As  the  power  to  issue  municipal  bonds  is  derived  from  the 
charter  of  the  corporation,    or  the  constitution  or  statutes  of 
the   state,    the    provisions    and   conditions  of   such    derived 
authority  should  always   be  carefully  followed  and   complied 
with  by  the  officers  having  charge  of  the  issue.     A   frequent 
condition  precedent  is  that  the  question  of  issuing  the  bonds 
must  be  submitted  to,  and  authorized  by,  a  vote  of  the  people 
or  qualified  electors.     In  such  cases  the  requisite  notice  must 
be  given  for  the  time,  the  election  called  and  held,  and  the 
result  declared  and  certified,  in  the  manner  provided  by  law. 
If  the  necessary  majority  vote  is  not  obtained  at  such  election, 
no  authority  exists  for  the   issue  of  the   bonds.     When   the 
proposition  has  thus  been  voted  upon,  no  material  deviation 
from  the  terms  submitted  can  be  made  by  the  officers  issuing 
the  bonds. 

63.  Regularity — Record  : — If  action  is  required  to  be 
taken  by  a  city  council,  county  board,  or  other  similar  body, 
or  board  of  officers,  all  proceedings  should  be  had  at  legally 
convened  meetings  with  the  requisite  quorum  present  and  in 
the  manner  required  by  law.     So  with  all  other  preliminary 
proceedings  or  precedent  conditions  or  provisions  relating  to 
the  issue  of  such  bonds,  special  care  should  be  taken  in  their 
strict  performance,  as  prescribed  in  the  enabling  acts.     Not  only 
should  all  the  prescribed  requirements  and  conditions  be  fol- 
lowed and  performed,  but  a  full  and  complete  record  should  be 
made  of  all  proceedings  relating  to  the  issue  of  the  bonds, 
showing  affirmatively  the  performance  of  all  such  conditions  and 
acts  requisite  to  the  validity  of  the  issue  of  the  bonds.      How- 
ever, as  we  shall  see  under  the  subject  of  municipal  estoppel, 

(43) 


44  THE    ISSUE    OF   MUNICIPAL    BONDS. 

mere  irregularities  in  the  issue  of  such  bonds  will  not  usually 
affect  their  validity  in  the  hands  of  a  bona  fide  holder  without 
notice. 

64.  Rule    as    to    Determining    Majority : — It   is    fre- 
quently provided  that  the  issue  of  bonds  or  other  acts  relating 
thereto,  depends  upon,  or  must  first  be  authorized  by  a  vote  of 
a  majority  or  more  of  the   electors,  legal  voters,  or  tax-payers 
of  the  municipality.     The  question  then  arises  as  to  what  con- 
stitutes such  majority,  and  what  is  the  rule  for  determining 
the  same.     The   generally   accepted    doctrine    is    that    such 
majority  is  determined  by  those  voting  upon   the   submitted 
proposition.1     This  rule   has   been   laid   down   by  the  U.  S. 
Supreme  Court  in  several  cases.     The   Missouri   constitution 
prohibits  subscriptions  by  towns  to  the  capital  stock  of  railroad 
companies  unless  two-thirds  of  the  qualified  electors   thereof, 
at  a  regular  or  special  election,  shall  assent  thereto.     In  an 
opinion  of  that  court,  delivered  by  Chief  Justice  Waite   it  was 
held  that  if  two-thirds  of  such  electors,  voting  at  an  election 
held  for  that  purpose,  voted  in  favor  of  the  submitted  propo- 
sition,  it  was  a  sufficient  compliance  with  the  constitution. 

' '  This  was  the  mode  provided  by  law  for  ascertaining  the  sense 
of  the  qualified  voters  of  the  city  upon  that  question.  There 
would  appear  to  be  no  other  way  practicable  in  which  the  mat- 
ter could  be  determined."2 

65.  The  Mississippi   constitution  requires  the  assent  of 
two-thirds  of  the  qualified  voters  of  counties,  cities  and  towns 
at  an  election  held  therein  to  authorize  the  issue  of  bonds  for 
railroad  subscriptions.     The  U.  S.  Supreme  Court  held  that 
this  meant  the  assent  of  two-thirds  of  the  qualified  voters  pres- 
ent and  voting  at  such  election.     In  that  case  it  was  contended, 
in  behalf  of  the  county,  that  as  there  was  a  registration  of  the 
qualified  voters  required  by  law  to  be  kept,  that  such  registra- 
tion was  the  proper  means  from  which  to  obtain  the  number 
of  qualified  voters,  but  the  court  held   to  its  previous   rule, 

1  McCrary  on  Elections,  133,  Sec.  183. 

2  Cass  Co.  v.  Johnston,  95  U.  S.,  360  (1887);  State  v.  Mayor  of  St. 
Joseph,  37  Mo.  270;  State  v.  Binder,  38  Mo.  450. 

Also  see  Note  to  \  3  under  Missouri  Digest  post. 


THE    ISSUE    OF   MUNICIPAL    BONDS.  45 

declaring  that  the  words  "qualified  voters,"  as  used,  must  be 
taken  to  mean  not  those  qualified  and  entitled  to  vote,  but 
those  qualified  and  actually  voting.  In  that  connection  the 
voter  is  one  who  votes,  not  one  who,  though  qualified  to  vote, 
does  not  vote.1  However  it  has  been  held  in  several  cases  in 
the  state  courts  that  where  several  questions  were  submitted  at 
the  same  time,  a  majority  vote  on  the  particular  question  was 
not  sufficient,  unless  such  vote  was  also  a  majority  of  all  the 
votes  cast  on  any  other  question  submitted  at  the  same  time.2 
The  law  or  enabling  act  frequently  provides  for  a  decision  of 
the  submitted  question  by  a  majority  or  other  proportion  of 
those  voting  thereon. 

66.  Municipal  Officers: — The  issue  of  bonds,  like   all 
other  acts  of  municipal  corporations,  must  be   done  through 
agents  or  officers.     The  bonds  are  usually  signed  by  the  prin- 
cipal officer  of  the  municipality,  as  the  mayor  in  the  case  of 
cities,  and  countersigned  by  the  officer  having  charge  of  the 
municipal  records,  and  sometimes  also  by  the  treasurer.     We 
are  required  to  look  to  the  charter  of  the  corporation,  or  the 
enabling  act  under  which  the  bonds  are  issued,  to  ascertain  the 
proper  officers  to  make  the  issue,  and  execute  the  bonds,  and 
to  ascertain  the  extent  of  such  officers'  powers.     To  a  limited 
extent,  the  law  of  principal  and  agent  is  applicable  to  munic- 
ipal  officers,   but  one  important  distinction  is,    that  while   a 
private  principal  may  be  bound  by  the  unauthorized  acts  of 
his  agent,  if  within  the  scope  of  his  general  authority,  the 
powers  of  a  municipal  officer  are  limited  and  defined  by  law, 
of  which  all  persons  must  take  notice. 

67.  Form  of  Bonds  : — It   being   determined    that   the 
municipality  has  the  power  to  issue  bonds,  the  particular  form 
in  which  they  may  be  issued,  if  not  prescribed  by  law,  is  not 
material  to  their  validity.     However,  if  the  form  is  prescribed 
by  the  enabling  act  or  other  law  governing  their  issue,  that 
form  should  be  followed.3     Municipal  bonds  usually  have  the 


1  Carroll  Co.  v.  Smith,  in  U.  S.,  556  (iJ 

2  People  v.  Winant,  48  Ills.  263,  and  State  v.  Winkelmier,  35  Mo. 
103. 

3  Anthony  v.  Jasper  Co.  101,  U.  S.  693  (1880). 


46  THE    ISSUE   OF   MUNICIPAL   BONDS. 

body  of  the  bonds,  printed  or  engraved  with  some  appropriate 
caption,  contain  a  formal  acknowledgment  in  the  name  of  the 
corporation  of  the  amount  of  indebtedness  evidenced  by  the 
bond,  with  a  promise  to  pay  such  amount  to  a  payee  named, 
or  bearer,  at  a  designated  place,  with  interest  at  a  specified  rate 
per  annum,  payable  annually  or  semi-annualby,  as  evidenced  by 
coupons  attached.  The  bond  also  frequently  recites  the  pur- 
pose for  which  it  is  issued  ;  the  aggregate  amount  of  the  issue; 
contains  a  reference  to  the  law  under  which  the  issue  was 
made  ;  recites  a  compliance  therewith;  a  pledge  of  the  munic- 
ipal faith  and  credit  to  the  payment  of  the  bond;  and  closes 
with  a  formal  recital  of  its  execution,  and  has  the  signatures 
of  the  proper  officers  subscribed,  and  the  corporate  seal 
attached. 

68.     Illustrative  Form: — The   following  will   illustrate   a 
form  for  a  municipal  bond  : — 

No.  9.  CHICAGO  CITY  FUNDING  BOND.  $1,000.00. 


UNITED  STATES  OF  AMERICA. 

(City  Seal  or  other  figure.} 
STATE   OF   ILLINOIS.  COOK   COUNTY. 

Know  all  Men  by  These  Presents,  That  the  city  of  Chicago, 
in  the  County  of  Cook,  and  State  of  Illinois,  acknowledges 
itself  as  legally  indebted,  and  hereby  promises  to  pay  to  S.  A. 
Kean  &  Co.  or  bearer,  the  sum  of  ONE  THOUSAND  DOLLARS 
on  the  first  day  of  July,  1908,  with  interest  thereon  at  the  rate 
of  five  per  cent  per  annum,  payable  semi-annually,  on  the  first 
days  of  January  and  July  in  each  year,  on  the  presentation 
and  surrender  of  the  annexed  coupons  as  they  severally  become 
due.  Both  principal  and  interest  are  payable  at  the  banking 
house  of  the  said  S.  A.  Kean  &  Co.  in  the  city  of  New  York. 

This  bond  is  one  of  a  series  of  fifty  bonds,  of  the  same  date 
and  tenor,  for  the  aggregate  sum  of  fifty  thousand  dollars, 
issued  for  the  purpose  of  funding  outstanding  city  warrants, 
Said  issue  has  been  authorized  by  an  ordinance  legally  passed 


THE    ISSUE   OF   MUNICIPAL    BONDS.  47 

by  the  council  of  the  said  city  of  Chicago,  and  the  said  bonds 
are  issued,  and  all  proceedings  relating  thereto  have  been  had 
in  strict  compliance  with,  and  conformity  to,  the  charter  of  the 
said  city  of  Chicago,  and  the  laws  and  constitution  of  the 
state  of  Illinois.  And  for  the  payment  of  the  said  bonds  and 
coupons,  according  to  the  tenor  thereof,  the  full  faith  and  credit 
of  the  said  city  of  Chicago  is  hereby  irrevocably  pledged. 
In  Witness  Whereof,  the  said  city  of  Chicago  has  caused  this 

bond  to  be  signed    by  its  Mayor,   and  counter- 
L.  s.         signed  by  its  City  Clerk,  and  its  corporate  seal 

attached  hereto,  this  first  day  of  July,  A.  D.  1888. 

(Signatures.) 
Coupon. — 


$25.  ON  JANUARY  i,  1890,  No.   i. 

The  City  of  Chicago,  Illinois,  promises  to  pay 
S.  A.  Kean  &  Co.  or  bearer,  at  the  Banking  House  of  the 
said  S.  A.  Kean  &  Co.  in  the  City  of  New  York,  the  sum  of 
Twenty-five  Dollars,  being  six  months'  interest  due  that  day  on 
its  Funding  Bond  No.  9,  dated  July  i,  1888. 

(Signature.) 

69.  Number  of  Bond — Payee  : — For  convenience  in 
issuing,  registering,  and  paying,  bonds  are  nearly  always 
numbered,  but  such  number  is  held  not  to  be  a  material  part 
of  the  bond,  so  that  its  alteration  will  not  affect  a  bona  fide 
holder.  Bonds  are  usually  issued  payable  to  some  designated 
payee,  or  bearer.  The  issuing  of  bonds  with  the  payee  in  blank 
makes  them  negotiable  by  delivery,  and  payable  to  the  holder 
or  bearer,  and  authorizes  any  legal  holder  to  fill  up  the  blanks 
with  his  own  name,  or  make  them  payable  to  himself  or 
bearer.1  If  they  are  payable  to  the  order  of  a  payee  named,  a 
blank  indorsement  by  such  payee  makes  them  likewise  paya- 
ble to  bearer,  and  thereafter  they  may  be  passed  by  delivery, 
as  other  negotiable  paper. 

1  White  v.  Vt.  &  M.  R.  R.  Co.,  21  How.  575. 


48  THE    ISSUE   OF   MUNICIPAL,    BONDS. 

70.  Place  of  Payment : — As  a  matter  of  convenience, 
bonds  are  usually  made  payable  at  some  bank  or  banking  house 
in  one  of  the  larger  cities  of  the  country.     It  has  been  repeat- 
edly decided  by  the  state  and  federal  courts  that  municipalities 
may  make  their  bonds  payable  beyond  the  limits  of  the  state 
in  which  they  are  issued.     The  decisions  of  the  Illinois  courts 
are  the  only  exception,  as  far  as  we  are  aware,  to  this  univer- 
sally approved  doctrine,  that  such  bonds  may  be  made  payable 
at  any  place  in  or  out  of   the  state.     In  Illinois  the  supreme 
court  has  decided  that  in  the  absence  of  special  legislative 
authority  to  make  the  place  of  payment  elsewhere,  a  munici- 
pality of  that  state  cannot  be  required  to  pay  its  obligations, 
except  at  the  usual  office  of  its  treasurer.    But  even  in  Illinois 
the  making  of  such  bonds  payable  without  the  state  is  held 
not  to  effect  the  validity  of  the  bonds,  but  should  the  munici- 
pality issuing  them  fail  or  refuse  to  pay  them  at  the  place 
named,  the  holder  would  be  required  to  present  them  to  the 
municipal   treasurer,   where,   in  law,   they  would  be  deemed 
payable,  the  place  of  payment  named  in  the  bond  being  treated 
as  surplusage  in  that  case.1     However,  many  Illinois  acts  rela- 
ting to  the  issue  of  various  bonds,  provide  that  they  may  be 
made  payable  at  other  places  than  at  the  treasury,  or  that  the 
place  of  payment  may  be  submitted  with  the  proposition  to 
issue,    or  be  decided   by  the   authorities  issuing  the  bonds. 
Nebraska,  Kansas  and  possibly  other  states  have  provided  by 
statute  for  the  establishment  of  a  fiscal  agency  in  New  York 
where  their  municipal  bonds  may  be  made  payable. 

71.  Signatures  : — The  validity  of  coupons  \yith  the  sig- 
natures engraved,  lithographed  or  stamped  thereon,  have  been 
sustained  in  several  cases.2     Whether   such   lithographed   or 

1  People  v.  Tazewell  Co.,  22  Ills.,  151;  Pekin  v.   Reynolds,   31   Ills., 
530;  Johnston  v.  Stark  Co.,  24  Ills.,  91;  Sherlock  v.  Village  of  Winnetka, 
68  Ills..  530;  Burroughs,  Pub.  Securities,  248. 

2  McKee  v.  Vernon  Co.,  3  Dill.,  210;  Town  of  Weyauwega  v.  Ayling, 
99  U.  S.,  118  (1879).     In  this  case  the  bonds  contained  the  signature,  and 
the  coupons  the  lithographed  signature  of  one  who  filled  the  office  of 
Town  Clerk  at  the  date  of  the  bonds,  but  who  had  resigned,  and  another 
clerk  had  been  elected  prior  to  their  execution  and  delivery.     The  bonds 
were  held  valid  and  the  town  estopped  from  setting  up  the  facts,  as 
against  a  bona  fide  holder. 


THE    ISSUE    OF   MUNICIPAL    BONDS.  49 

stamped  signatures  on  the  bond  itself  would  be  sufficient,  is  a 
question  which,  as  far  as  we  are  aware,  has  not  yet  been 
decided,  but  from  the  general  principle  governing  other  nego- 
tiable instruments  and  their  execution,  we  presume  that  such 
a  signature,  if  adopted  by  the  officer,  would  be  sustained,  and 
the  bonds  so  executed  held  valid.  However,  it  is  undoubtedly 
the  better  and  safer  practice  that  the  bond  at  least  should  be 
subscribed  with  the  written  signature  of  the  officer  executing 
the  same. 

72.  Seal : — It  is  the  almost  universal  practice  to  issue 
municipal  bonds  under  the  seal  of  the  corporation  issuing  them, 
and  such  seal  should  always  be  attached  when  the  corporation 
has  one.     A  seal  was  formerly  considered  essential  to  the  issue 
of  a  municipal  bond,  but  from  the  later  decisions  it  seems  that 
such  bonds,  from  which  the  seal  has  been  omitted,  are  valid,  at 
least  as  obligations  against  the  municipal  corporation  issuing 
them.     Even  where  the  enabling  act  provides  for  the  issue  of 
bonds  under  seal,  the  omission  of  such  seal  was  held  to  be  no 
defense  against  the  payment  of  the  bonds   which  had  been 
issued  and  purchased  in  good  faith.     In  case  the  seal  is  omitted 
by  mistake,  a  court  of  equity  will  not  allow  a  municipality  to 
set  up  such  omission,  in  a  suit  on  the  bonds  by  a  bona  fide 
purchaser.1 

73.  Execution  by  Less  than  a  Full  County  Board: — 
Where  the  law  requires  bonds  to  be  issued  by  the  board  of 
county  commissioners,  or  any  similar  board  or  body  acting  in 
behalf  of  a  municipality,  and  it  appears  that  a  majority,  or  less 
than  the  whole  number  of  such  board,   are  a  legal  quorum 
authorized  to  act  therefor,  or  represent  a  legal  board  for  the 
transaction  of  business,  then  the  execution  of  such  bonds  by  a 
majority  or  such  designated  number  of  the  board,  will  be  a 
sufficient  execution  thereof.     A  Pennsylvania  act  authorized 
the  issue  of  railroad  bonds  by  the  county  commissioners,   of 
whom  there  were  three.     The  bonds  were  signed  by  only  two 
commissioners,  but  as  it  appeared  that  under  the  state  statute 

1  San  Antonio  v.  Mehafly,  96  U.  S.,  312  (1878);  Draper  v.  Springport, 
104  U.  S.,  501  (1881);  Bernard  Tp.  v.  Stebbins,  109  U.  S.,  341  (1883). 


5O  THK    ISSUE    OP    MUNICIPAL    BONDS. 

two  formed  a  board  for  the  transaction  of  business,  the  execu- 
tion was  held  sufficient.1 

74.  Registration    by    State   Officers :  —  Under    recent 
statutes  passed  by   several   states,   municipal   authorities   are 
required  to  present  a  transcript  of  the  proceedings  relating  to 
the  issue  of  bonds  to  the  state  auditor,  or  other  officer,  whose 
duty  it  is  to  make  an  examination  thereof,  and  if  found  suffi- 
cient and  regular,  to  register  the  bonds  in  his  office,  and  certify 
the    same    by    indorsement    thereon.      These   provisions   are 
intended  as  an  additional  safeguard  to  the  purchaser  of  such 
bonds,  and  a  protection  to  the  tax-payer  of  the  municipality 
against  unauthorized  issues.     In  Nebraska  the  state  constitu- 
tion provides  that  no  bonds  issued  as  donations  to  railroads  or 
works  of  internal  improvement  .shall  be  valid,  unless  they  shall 
have  indorsed  thereon  a  certificate  signed  by  the  secretary  and 
auditor  of  state,  showing  that  that  same  is  issued  pursuant  to 
law. 

75.  Effect  of  Auditor's  Certificate: — The   legal  effect  of 
such  registration  and  certificate  has  been  the  subject  of  consid- 
erable discussion  and  several  adjudications.     It  must  depend 
to  a  great  extent  upon  the  language  of  the  statute  and  the  form 
of  the  certificate.     In  Missouri  the  registration  statute  provides 
that  the  state  auditor's  certificate  shall  be  prima  facie  evidence 
of  the  facts  stated.     The  Kansas  act  of  1872  provides  that  the 
auditor,  upon  being  satisfied  that  the  bonds  have  been  issued 
according  to  the  provisions  of  the  law,  and  that  the  signatures 
thereto  are  genuine,  shall  register  the  same  in  his  office,  and 
certify  upon   the   bonds  that  they  have  been  regularly  and 
legally  issued,  and  that  the  signatures  are  genuine. 

76.  Opinion  of  U.  S.  Supreme  Court : — These  acts  have 
been  before  the  U.  S.  Supreme  Court  in  several  cases.     From 
an  examination  of  all  such  cases  in  which  this  question  has 
been  under  consideration,  we  understand  that  court  to  hold 
that  such  a  certificate  is  not  conclusive,  except  perhaps  as  to 
facts,  the  existence  of  which  it  was  made  the  duty  of  the  audi- 

1  Curtis  v.  Butler  Co.,  24  How.,  435. 


THE    ISSUE   OF   MUNICIPAL   BONDS.  5! 

tor  to  ascertain.  "  Xo  conclusive  effect  is  given  by  the  consti- 
tution or  the  statute  to  this  registration  or  to  these  certificates. 
In  any  event  they  could  not  be  considered  as  more  comprehen- 
sive or  efficacious  than  the  statements  contained  in  the  body  of 
the  bonds,  and  verified  by  the  signatures  of  the  county  officers 
and  the  seal  of  the  county,  except  as  additional  steps  required 
to  be  taken  in  the  process  of  issuing  the  bonds  and  rendered 
necessary  to  their  validity."1  *  *  *  *  jf  complete  and 
conclusive  effect  were  given  to  the  ex-parte  record  of  the  auditor 
of  state,  the  obvious  design  and  just  purpose  of  the  statute  would 
be  not  secured,  but  subverted,  and  municipal  corporations  might 
be  subjected  to  liability  for  bonds  purporting  to  be  issued  by 
them,  which  in  fact  and  in  law  were  not  their  obligations,  by 
virtue  of  a  proceeding  of  which  they  had  no  notice,  resulting  in 
an  adjudication  which  they  had  no  opportunity  of  contesting. 
A  construction  of  the  statute  that  necessarily  leads  to  that  con- 
clusion would  be  repugnant  to  fundamental  principles  of 
common  right."2  The  certificate  does  not  cover  questions  of 
law.  But  as  to  the  fact  of  the  bonds  having  been  duly  registered, 
although  no  registration  had  been  made  in  the  auditor's  office, 
his  certificate  to  that  effect  would  be  sufficient,  and  proof  that 
they  had  not  been  so  registered  would  not  be  admissible  to 
contradict  the  certificate  after  the  bonds  were  in  the  hands  of 
an  innocent  holder.3 

77.  Legislative  Control : — Municipal  powers  and  their 
exercise,  including  all  questions  relating  to  the  issue  of  munic- 
ipal bonds,  are  under  the  control  of  the  state  legislature,  subject 
only  to  the  limitations  of  the  state  constitution  or  other  organic 
law,  already  considered.  The  legislature  may  authorize  the 
issue  of  bonds  for  any  corporate  purpose;  may  prescribe  the 
amount,  manner  in  which  and  by  whom,  the  issue  shall  be 
made;  the  form  of  the  bonds  and  their  execution,  and  the  effect 
of  the  bonds  when  issued.  The  legislature  may  require  or  dis- 

1  Dixon  Co.  v.  Field,  in  U.  S.,  83  (1884). 

2  Bissell  v.  Spring  Valley  Township,  no  U.  S.,  162  (1886). 

8  Rock  Creek  Township  v.  Strong,  96  U.  S.,   271;  Lewis  v.   Barbour 
Co.,  105  U.  S.,  739  (1882);  Crow  v.  Oxford  Township,  119  U.  S.,  215  (1886). 


52  THE   ISSUE   OF   MUNICIPAL    BONDS. 

pense  with  a  precedent  election  or  any  other  preliminary  pro- 
ceeding. 

78.  Curative  Acts: — Cases  are  frequent  where  the  legis- 
lature attempts  to  cure  irregularities  or  defects  in  the  issue  of 
bonds,  or  other  acts  of  municipal  corporations.  How  far  can 
this  be  done  ?  The  legislature  may  validate  any  law  or  act 
which  it  might  originally  have  authorized.  Where  the  power 
to  issue  the  bonds  or  do  the  acts  is  derived  from  the  legisla- 
ture, it  is  always  within  the  power  of  such  legislature  to  declare 
valid,  acts  irregularly  or  defectively  performed,  when  it  could 
have  originally  dispensed  with  any  condition  omitted,  or  made 
the  law  valid,  in  spite  of  the  irregularity.  In  other  words,  we 
understand  the  law  to  be,  that  the  legislature  in  such  cases  can 
do  retrospectively,  what  it  could  have  done  in  the  first  place 
and  no  more.1 

1  Cooley's  Const.  L,im.  371,  et  seq. ;  St.  Joseph  Township  v.  Rogers, 
83  U.S.,  666  (1878)  ;Jonesborov.  Cairo,  no  U.  S.,  162  (1884);  Otoe  v. 
Baldwin,  in  U.  S.,  i  (1884);  Grenada  Co.  v.  Brown,  112  U.  S.,  261(1884); 
Bolles  v.  Town  of  Brimfield,  120  U.  S.,  759  (1887). 


CHAPTER  VI. 


RIGHTS  AND  REMEDIES  OF  MUNICIPAL  BOND  HOLDERS. 

79.  Negotiability    of    Municipal    Bonds: — Municipal 
bonds  issued  under  an  authorized  power,  and  in  a  negotiable 
form,    have   the   usual  qualities  and    incidents  of  commercial 
paper.     This  we  understand  to  be  the  law  of  all  the  courts, 
both   state  and   federal,    as   shown    by  numerous    decisions.1 
Coupons    for    installments    of    interest,    when    severed    from 
bond,  are  likewise  negotiable,  and  bear  interest  from  the  date 
of  their  maturity.2     Overdue  interest  coupons,  of  bonds  which 
have  not  matured,  are  still  negotiable  under  the  law  merchant.3 

80.  Equitable   Estoppel: — One   of  the  most  important 
legal  principles  in  the  consideration  of  the  subject  of  munici- 
pal bonds,  is  the  doctrine  of  equitable  estoppel  in  the  various 
forms  which  it  is  applied  to  the  protection  of  a  bona  fide  holder 
of  this  class  of  public  securities.     While  any  material  omission 
or  deviation  from  the  preliminary  proceedings  prescribed  will 
be  good  cause  to  prevent  the  issue,  if  properly  raised  before 
the  delivery  of  the  bonds,  or  before  the  rights  of  an  innocent 
purchaser  becomes   involved,  it   is  well  settled  by   repeated 
judicial  decisions  that  if  the  municipality  has  the  power  to 
issue  bonds,  and  the  bonds  are  issued  in  proper  form,  and  recite 
a  compliance  with  the  law  authorizing  the  issue,  or  the  per- 
formance of  the  facts  necessary  to  the  issue,  no  mere  irregular- 
ity in  the  exercise  of  the  authorized  power  or  in  the  proceedings 

1  Gelpecke  v.  Dubuque,  i  Wall.,  175  (1863);  Mercer  v.  Hackett,  Id. 
83  (1864);  Nashville  v.  Ray,  19  Wall.,  468;  Ottawa  v.  First  National  Bank 
of  Portsmouth,  105  II.  S.,  342  (1882). 

2  Walnut  v.  Wade,  103  U.  S.,  683   (1881);  Stewart  v.  pausing,    104 
U.  S.,  305  (1882). 

3  Town  of  Thompson  v.  Perrine,  106  U.  S.,  589  (1883). 

(S3) 


54        RIGHTS   OF    BOND    HOLDERS — EQUITABLE   ESTOPPEL. 

preliminary  to  the  issue,  will  avail  against  a  bona  fide  holder 
of  the  bonds. 

81.  Municipal    Decision: — Where     certain     officers    are 
authorized  to  issue  bonds  of  the  municipality  on  the  perform- 
ance of  prescribed  conditions,  and  it  is  provided,  or  appears 
by  fair  implication,  that  such  officers  are  the  proper  judges  to 
determine  as  to  the  performance  of  the  conditions,  when  they 
do  so  determine,  and  issue  the  bonds,  the  municipality  is  pre- 
cluded from  asserting  the  non-performance  of  the  preliminary 
conditions  as  a  defense  to  the  bonds  in  the  hands  of  a  bona  fide 
holder.     The  power  of  the  officers  to  decide  the  question  may 
be  express,  or  may  be  deduced  from  the  necessities  of  the  case, 
or  the  general  provisions  of  the  law  under  which  the  bonds  are 
issued,  or  the  action  taken.    If  it  appears  that  the  question  was 
determined  by  the  proper  officers  and  the  decision  is  shown  by 
a  recital  in  the  bonds,  or  otherwise,  it  is  sufficient.     Such  deci- 
sion estops  the  municipality  from  denying  that  the  conditions 
have  not  been  complied  with  as  required. 

82.  Illustrations: — Where  commissioners  were  authorized 
to  issue  bonds  of  the  county  when  a  majority  of  the  vaters  had 
so  voted;   whether  the  election  was  properly  held,   and  the 
required  majority  obtained,  were  questions  for  the   board   to 
decide,  and  a  general  recital  by  them  in  the  bonds  that  such 
bonds  had  been  issued  in  pursuance  of  an  act  authorizing  the 
same,  was  held  to  be  conclusive  against  the  county  in  favor  of 
a  bona  fide  holder.1     A  recital  in  bonds  that  they  were  issued 
in  pursuance  of  the  written  assent  of  two-thirds  of  the  resident 
tax-payers  (as  was  required),  was  held  as  a  conclusive  decision 
that  such  assent  had  been  properly  obtained.2  A  recital  that  the 
bonds  were  issued  in  pursuance  of  a  vote  of  the  electors,  has  been 
held  to  be  equivalent  to  a  statement  that  the  vote  was  regular 
and  lawful,  that  the  required  election  was  held  in  conformity 
with  law  and  that  the  proper  notice  thereof  was  given;  and  evi- 

1  Knox  v.  Aspinwall,  21  How.,  589;  Bissell  v.  City  of  Jeffersonville, 
24  How.,  287;  Buchanan  v.  Litchfield,  102  U.  S.,  290. 

2  Town  of  Venice  v.  Murdock,  92  U.  S.,  494;  Rock  Creek  v.  Strong, 
96  U.  S.,  271. 


RECITALS    IN    MUNICIPAL    BONDS.  55 

dence  that  the  notice  was  insufficient  would  be  inadmissible 
against  a  bona  fide  holder.1 

83.  .4s  to  Amount  of  Bonds  which  May  be  Issued: — It  has 
been  held  in  several  cases  that  municipal  bonds  are  not  invalid 
in  the  hands  of  a  bona  fide  holder  by  reason  of  their  having 
been  voted  and  issued  in  excess  of  the  statutory  limit,  if  the 
recitals  import  a  valid  issue."     It  has  been  decided  in  a  recent 
federal  case 3  that  the  doctrine  is  good  even  against  a  constitu- 
tional   limitation  on  the   amount  of  municipal  indebtedness. 
County  funding  bonds  recited  a  compliance  with  the  act  under 
which  they  were  issued,  but  did  not  show  the  amount  of  the 
issue.      The   court  held  that  the  county  was  estopped  from 
alleging  against  a  bona  fide  holder,  that  the  bonds  were  issued 
in  violation  of   the  constitutional  limitation  on  the  amount 
which  the  county  could  legally  issue. 

84.  Doctrine  Considered: — Such  recitals  are  in  legal  effect 
equivalent  to  a  representation,  warranty,  or  certificate  on  the 
part  of  the  officers,  that  everything  necessary  has  been  done, 
and  every  necessary  fact  existed  to  make  the  bonds  lawful  and 
binding.    But  this  does  not  extend  to,  or  cover,  matters  of  law. 
The  estoppel  does  not  arise  except  upon  matters  of  fact  which 
the  corporate  officers  were  authorized  to  determine  and  certify. 
The  general  recital  that  the  bonds  have  been  issued  in  conform- 
ity with  the  law  will  suffice  to  embrace  every  fact  which  the 
officers  making  the  statement  are  authorized  to  determine  and 
certify.     The  ground  of  the  estoppel  is  that  the  recitals  are  the 
official  statement  of  those  to  whom  the  law  refers  the  public  for 
authentic  and  final  information  on  the  subject/ 

85.  Municipal  Estoppel  by  Ads: — The  omission  or  irregu- 
lar performance  of  preliminary  conditions,  may  be  cured  by  the 

1  Ind.  School  Dist.  v.  Stone,  106  U.  S.,  183  (1882);  Pana  v.  Bower, 
107  U.  S.,  529(1883);  Anderson  v.  Beal,  113  U.  S..227  (1884);  Oregon  v. 
Jennings,  119  U.  S.,  74  (i888l 

2  Marcy  v.  Oswego,  92  U.  S.,  637  (1876);  Humboldt  Tp.  v.  Long,  Id., 
642;  Wilson  v.  Salamanca,  99  U.  S.,  499;  Dallas  County  v.  McKenzie,  TIO 
U.  S.,  686  (1884);  New  Providence  v.  Halsey,  117  U.  S.,  336  (  1886). 

3  Potter  v.  Bd.  of  Comrs.  of  Chaffee  Co.  (Col.),  33  Fed.,  Rep.  614 
(1888);  also  see  §  59,  p.  41,  herein. 

*  Dixon  Co.  v.  Marshall  Field,  in  U.  S.,  83.  (1883.) 


56  RIGHTS   OF    BONA    FIDP;   HOLDERS   OF   BONDS. 

failure  to  enjoin  the  issue  and  long  acquiescence,  accompanied  by 
acts  recognizing  their  validity.  The  principle  that  the  acts  of 
agents  irregularly  or  defectively  exercised  may  be  thus  ratified 
applies  to  municipal  as  well  as  private  corporations  and  individ- 
uals, although  to  a  much  less  extent.  The  levying  of  taxes  to 
pay  bonds,  and  the  payment  of  interest  thereon  for  a  number 
of  years  cures  mere  irregularities  in  their  issue  in  the  hands  of  a 
bona  fide  holder.1  Where  a  municipality  receives  for  its  bonds 
stock  which  it  holds  and  accepts  benefits  from  for  several  years, 
the  defense  that  the  bonds  were  issued  irregularly  and  that 
some  of  the  conditions  precedent  were  not  complied  with,  will 
not  be  allowed.2  Failing  to  enjoin  the  issue  of  bonds,  and 
paying  the  interest  thereon  for  ten  years,  estopped  a  county 
from  defending  against  a  holder  for  value,  for  want  of  a  proper 
notice  of  the  election  authorizing  their  issue.3  But  neither  the 
payment  of  interest  on,  or  other  acts  of  the  municipal  officers 
relating  to  bonds  issued  tillra  vires  will  amount  to  a  ratification 
of  such  bonds,  or  estop  the  municipality  from  setting  up  an 
absolute  want  of  power  to  issue  them.4 

86.  Rights  of  Bona  Fide  Holders: — It  is  a  general  rule 
that  a  bona  fide  purchaser  of  municipal  bonds  for  value,  before 
maturity,  takes  them  free  from  all  infirmities  in  their  issue,  un- 
less they  are  absolutely  void  for  want  of  power  to  issue  them. 
Such  bonds  if  issued  in  pursuance  of  a  power  conferred  by  the 
legislature  are  valid  commercial  paper,  and  if  purchased  for 
value  in  the  usual  course  of  business  before  they  are  due,  the 
holder  takes  a  good  title  free  from  all  prior  equities.  The 
holder  of  a  municipal  bond  or  other  commercial  paper,  in  the 
absence  of  proof  to  the  contrary,  is  presumed  to  have  taken 
it  before  maturity  for  a  valuable  consideration,  and  without 
notice  of  any  objection  to  which  it  was  liable.  If  bonds 
show  by  their  recitals  that  a  power  was  exercised  in  the  manner 

1  Clay  Co.  v.  Society  for  Savings,  104  U.  S.,  579  (1882). 

2  Comrs.  of  Johnson  Co.  v.  January,  94  U.  S.,  202  (1877). 

3  Anderson  v.  Beal,  113  U.  S.,  227  (1884). 

4  Parkersburg  v.  Brown  106  U.  S.,  487  (1883).     See  "Ottawa  cases," 
pp.  si -24,  ante.     Loan  Association  v.  Topeka,  20  Wall. ,  655(1875). 


RIGHTS    OF    BOXA    FIDE   HOLDERS   OF    BONDS.  57 

required,  and  that  they  were  issued  in  conformity  to  prescribed 
regulations,  and  pursuant  to  required  conditions,  proof  that  any 
or  all  of  the  recitals  are  incorrect  will  not  constitute  a  defense 
in  a  suit  thereon.1  If  the  municipality  had  the  power  under 
any  circumstances  to  issue  the  securities,  a  bona  fide  holder 
has  the  right  to  presume  they  were  issued  under  the  circum- 
stances which  gave  the  authority.2  Where  the  bonds  on  their 
face  recite  the  circumstances  which  bring  them  within  the 
power,  the  corporation  is  estopped  to  deny  the  truth  of  the 
recital.  Irregularities  in  an  election  at  which  the  issue  of 
bonds  was  authorized  does  not  require  the  plaintiff  to  prove, 
in  the  first  place,  that  he  is  a  holder  for  value,3  but  if  fraud 
or  illegality  in  the  issue  is  shown,  a  purchaser  must  prove 
that  he  is  a  holder  for  value.4  Even  a  bona  fide  holder  of 
a  municipal  bond  is  bound  to  show  legislative  authority  for 
its  issue.  Recitals  therein,  or  acts  operating  by  way  of 
estoppel,  may  cure  irregularities  in  the  execution  of  a  statu- 
tory power,  but  they  cannot  create  such  power.5 

87.  Lis  Pendens: — The  doctrine  of  Us  pendens  does  not 
apply  to  municipal  bonds.     The  pendency  of  a  suit  to  enjoin  the 
issue  and  delivery  of  bonds  does  not  affect  the  title  of  a  bona  fide 
purchaser,  not  a  party  to  the  suit.      Any  judgment  or  decree 
relating  to  bonds  will  not  bind  or  affect  holders  or  purchasers 
in  good  faith  for  value,  who  were  not  parties  to  the  proceeding 
in  which  the  judgment  or  decree  was  rendered.8 

88.  Lost  or    Stolen    Bonds — Overdue  Coupons: — It 
follows  from  the  principles  already  laid  down,  that  if  a  munici- 
pal bond  payable  to  bearer  is  lost  or  stolen  before  maturity,  and 
comes  into  the  hands  of  an  innocent  holder  for  value,  he  will 

5  Warren  Co.  v  Marcey,  97  U.  S.,  96  (1878);  Comrs.    of  Marion  Co. 
v.   Clark,  94  U.  S.,  278  (1877),  and  cases  cited. 

2  San  Antonia  v.  Mehaffy,  96  U.  S.,  312;  Pompton  v.  Cooper  Union, 
101  U.  S.,  196  (1879). 

3  Chambers  Co.  v.  Clews,  21  Wall.,  317  (1874). 

4  Stewart  v.  Lansing,  104  U.  S-,  505  (1882). 

8  Hayes  v.  Holly  Springs,  114  U-  S.,  120  (1885). 

6  Cass  Co.  v.  Gillett,  160  U.  S.,  535  (1879);  Carroll  Co.  v.  Smith,  in 
U.S.,  556  (1884). 


5<S  RIGHTS   AND    REMEDIES    OF   BOND    HOLDERS. 

hold  the  same  even  against  the  losing  owner.  It  is  well  settled 
that  the  purchaser  of  coupon  bonds,  before  diie,  without  notice 
and  in  good  faith,  is  unaffected  by  want  of  title  in  the  seller, 
and  that  the  burden  of  proof  in  respect  to  notice  and  want  of 
good  faith  is  on  the  claimant  of  the  bonds  as  against  the  pur- 
chaser.1 It  was  formerly  held  that  bonds  having  attached 
coupons  for  several  years  overdue  and  unpaid  were  dishonored 
on  their  face,  and  the  purchaser  would  take  them  subject  to  all 
equities,  but  the  present  law,  at  least  as  laid  do\vn  by  the  fed- 
eral courts,  is  that  the  mere  presence  upon  the  bonds  before 
maturity  of  such  coupons,  without  other  circumstances  to  put 
the  purchaser  on  notice,  does  not  make  the  bonds  and  the 
subsequently  maturing  coupons  dishonored  paper.2 

89.  Enforcement  of  Payment  of  Bonds: — The  holder 
of  municipal   bonds   should   first   establish   the  validity  and 
amount  of  his  claim  by  a  suit   at  law  and  judgment  there- 
under.    A  bona  fide  holder  of  bonds  is  entitled  to  a  judgment 
thereon,  even  if  the  corporation  by  reason  of  a  limit  on  its  tax- 
ing power  cannot  levy  a  tax  to  pay  such  judgment.3     Public 
buildings,  and  other  property  held  for  public  purposes  cannot 
be  subjected  to  the  payment  of  the  debts  of  the  corporation.4 
The  usual  method  of  enforcing  the  payment  of  any  judgment 
obtained  against  a  municipal  corporation  on  its  bonds,  is  by  a 
writ  of  mandamus  against  the  proper  officers,  requiring  them  to 
levy  the  necessary  tax  for  the  payment  of  such  judgment.    This 
writ  is  one  of  the  principal  remedies  by  which  municipal  and 
public  corporations  are  compelled  to  perform  their  duties  toward 
their  creditors.5 

90.  What  Decisions  Control: — It  is  a  general  principle  of 
the  jurisprudence  of  the  United  States  that  the  construction 

1  Morgan  v.  U.  S.,  113  U.  S.,  476  (1885);  Murray  v.  Gardner,  2  Wall., 
118(1865). 

2  Cromwell  v.  Sac  Co.,  96  U.  S.,  51  (1878);  Ind.  &  Ills.  Cent.  R.  R. 
Co.  v.  Sprague,  103  U.  S.,  756  (1881);  Daniel's  Negotiable  Securities,  3d 
ed.,  §1560  a. 

3  Moultrie  Co.  v.  Fairfield,  105  U.  S.,  370  (1882). 

4  Meri wether  v.  Garrett,  102  U.  S.,  472  (i{ 

5  Dillon's  Mun.  Corps.  3d  ed.  \\  849-887. 


RIGHTS    AND    REMEDIES    OF    BOND    HOLDERS.  59 

given  to  a  statue  of  a  state  by  the  highest  courts  thereof  is  a  part 
of  the  statute  itself,  and  is  as  binding  upon  the  federal  courts  as 
the  text  of  the  statute.  A  purchaser  of  municipal  bonds,  how- 
ever, has  a  right  to  rely  upon  the  law  as  judicially  construed 
by  such  highest  court  at  the  time  the  bonds  were  issued.1 
Rights  accruing  under  a  construction  of  a  statute  authoriz- 
ing the  issue  of  public  securities  will  not  be  lost  merely  by  a 
change  of  opinion  in  the  local  court.  The  federal  court  in 
such  cases  will  follow  the  construction  of  the  statute  by  the 
state  courts  as  declared  at  the  time  the  securities  were  issued.2 
"It  is  undoubtedly  a  question  of  local  policy  with  each  state 
what  shall  be  the  extent  and  character  of  the  powers  which  its 
various  political  and  municipal  organizations  shall  possess,  and 
the  settled  decisions  of  its  highest  courts  on  the  subject  will  be 
regarded  as  authoritative  by  the  federal  courts."  The  federal 
courts,  however,  have  held  that  they-  are  not  bound  by  the 
decisions  of  the  state  courts  upon  questions  of  general  com- 
mercial law  in  their  application  to  municipal  bonds.4 

91.  Taxes  to  Pay  Bonds: — When  authority  to  borrow 
monej-  or  incur  an  obligation  for  public  purposes  is  conferred 
upon  a  municipal  corporation,  the  power  to  levy  a  tax  for  the 
payment  thereof  accompanies  the  authority  without  a  special 
grant  to  that  effect.5  Provision  is  generally  made  in  the  law 
under  which  bonds  are  iss.ued  for  the  levy  of  a  special  tax  for 
their  payment.  However,  unless  it  clearly  appears  otherwise, 
the  municipality  will  be  liable  for  the  payment  of  the  bonds 
regardless  of  the  special  levy,  and  for  any  balance  remaining 
due  thereon,  after  the  application  of  the  proceeds  of  the  special 
tax,  the  holders  are  entitled  to  payment  from  the  general  fund 

1  Elmwood  v.  Marcey,  92  U.  S.,  289  (1876);  Eucber  v.  Cheshire  R.  R. 
Co.,  125  U.  S.,  555  (1888). 

2  Bolles  v.  Town  of  Brimfield,  125  U.  S.  759  (1887). 

3  Claiborne  Co.  v.  Brooks,  in  U.  S.,  400  (1884). 

*  Pine  Grove  v.  Talcott,  86  U.  S.,666;  Cromwell  v.  Sac  Co.,  96  U.  S., 
51;  Oats  v.  National  Bank,  100  U.  S-,  239. 

5  U.  S.  v.  New  Orleans,  98  U.  S.,  393  (1879);  Quincy  v.  U.  S.,  113  U. 
S-  332  (1885). 


60  RIGHTS   AND    REMEDIES   OP   BOND    HOLDERS. 

of  the  corporation.1  The  general  liability  of  municipal  cor- 
porations for  the  payment  of  special  assessment  bonds  has 
already  been  considered.2  In  the  bond  acts  of  several  of  the 
states  will  be  found  provisions  for  the  collection  of  taxes  for 
the  payment  of  bonds  through  the  state  officers  in  case  the 
local  officers  fail  to  collect  such  taxes. 

92.  Tax  Laws  Irrepealable  as  to  Outstanding  Bonds: — 
Where  a  state  has  authorized  a  municipal  corporation  to  con- 
tract, and  to  exercise  the  power  of  local  taxation  to  an  extent 
necessary  to  meet  its  engagements,  the  power  thus  given  can- 
not be  withdrawn  until  the  contract  is  satisfied.  The  state  and 
corporation  in  such  cases  are  equally  bound.  The  power  given 
becomes  a  trust  which  the  donor  cannot  annul,  and  which  the 
donee  is  bound  to  execute.  The  laws  requiring  taxes  to  the 
requisite  amount  to  be  levied,  in  force  when  bonds  were  issued, 
remains  in  force  for  the  purpose  of  the  payment  of  such  bonds 
until  they  are  fully  paid.3  A  Virginia  act  repealing  a  previous 
act  which  provided  that  certain  coupons  of  its  bonds  should  be 
receivable  for  taxes,  was  declared  unconstitutional  as  to  such 
outstanding  coupons.4  It  has  been  repeatedly  decided  that 
laws  passed  after  the  issue  of  municipal  obligations,  taking 
away  the  power  to  levy  the  necessary  taxes  to  meet  their  pay- 
ment, are  invalid.5  It  may  be  stated  as  well  settled  law  that 
every  right  that  existed  to  enforce  the  payment  of  bonds  when 
they  were  taken  by  the  holder  remains  unimpaired,  and  that 
the  state  is  powerless  to  make  any  changes  affecting  such  rights. 

1  U.  S.  v.  Fort  Scott,  99  U.  S.(  152  (1879);  Knox  Co-  v  u-  s->  IO9 
U.S.  ,229(1883). 

2  See  pp.  32-36  herein. 

3  Von  Hoffman  v.  City  of  Quincy,  4  Wall.,  535  (1866).  V. 

4  Poindexter  v.  Greenhow,  114  U.  S.,  270  (1885);  Royal  v.  Virginia, 
116  U.  S.,  572  (1886). 

5  Galena  v.  U.  S.,  5  Wall.,  705  (1867);  United  States  v.  New  Orleans, 
103  U.  S.,  358  (1881);  Rails  Co.  v.  U.  S.,  105  U.  S.,  783  (1882). 


DIGEST 


OF  STATUTORY  LAWS  RELATING 

TO 

MUNICIPAL  BONDS. 


The  following  chapters  (VII.  to  XXII.)  contain  a  digest 
of  the  statute  laws  governing  or  relating  to  the  issue  of  munici- 
pal bonds  in  the  states  and  territories  named.1  The  list 
includes  those  states  and  territories  in  the  West  and  North- 
west, from  which  come  the  larger  portion  of  the  municipal 
bond  issues  usually  offered  investors.  For  evident  reasons  the 
purchasers  of  these  bonds  must  generally  be  sought  in  the 
older  states  where  money  is  more  abundant  and  interest  rates 
lower  than  where  they  are  issued.  In  these  cases  the  laws 
governing  the  issue  are  usually  inaccessible  to  the  proposed 
purchaser,  however  desirable  or  necessary  their  examination. 
While  a  large  number  of  municipal  bonds  are  issued  in  the 
New  England  and  Middle  states,  such  issues  are  usually  taken 
by  local  purchasers,  who  can  more  readily  examine  the  laws 
governing  the  same.  These  facts  explain  the  selection  of  the 
list  in  the  following  pages.  A  few  of  the  states  and  territories 
are  included  rather  for  geographical  completeness  than  because 
of  the  general  importance  of  their  bond  laws. 

We  have  aimed  in  all  cases  to  give  a  reference  to  the 
statutes  or  session  laws  where  the  digested  laws  may  be  found, 
so  that  an  examination  of  the  full  text  of  the  law  may  be 
more  readily  made,  and  any  further  change  therein  followed. 

1  This  digest  does  not  include  the  provisions  of  any  special  acts  or 
charters  applicable  only  to  particular  cities  or  other  municipal  corpora- 
tions. If  a  municipality  is  acting  under  a  special  act  or  charter,reference 
should  be  had  thereto  for  its  power. 

(61) 


CHAPTER  VII. 

OHIO. 


References  are  to  the  Revised  Statutes  of  iSSo  and  Supplements  thereto, 
e.rcept  as  otherwise  indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  in  force  September  ist,  1851. 

1.  State  Indebtedness: — To  supply  casual  deficiencies 
in  the  revenues,  or  to  meet  expenses  not  otherwise  provided 
for,  the  state  may  contract  debts  to  an  amount  in  the  aggregate 
not  exceeding  seven  hundred  and  fifty  thousand  dollars.    (Art. 
8,  Sec.  i.) 

2.  State  Credit : — The  credit  of  the  state  shall  never  be 
given  or  loaned  to  or  in  aid  of  any  individual,  association  or 
corporation,  nor  shall  the  state  ever  become  a  joint  owner  or 
stockholder  in  any  company  or  association.     The  state  shall 
never  assume  the  debts  of  any  county,  city,  township,  or  of  any 
corporation,  unless  the  same  have  been  created  to  repel    inva- 
sion, suppress  insurrection,  or  defend  the  state  in  war.     The 
state  is  prohibited  from  contracting  any  debt  for  purposes  of 
internal  improvement.     (Art.  8,  Sees.  4  to  5;  Art.  12,  Sec.  6.) 

3.  Municipal  Credit : — The  general   assembly   is   pro- 
hibited from  authorizing  any  county,  city,  town  or   township, 
by  vote  of  its  citizens,  tc  become   a  stockholder  in  any  joint 
stock  company,  corporation,  or  association,  or  to  raise  money 
for,  or  to  loan  its  credit  to,  or  in  aid  of  any  such  company, 
corporation,  or  association.     (Art.  8,  Sec.  6.) 

4.  Special   Legislation:1 — The  general  assembly  shall 
pass  no  special  act  conferring  corporate  powers.     (Art.  13,  Sec. 
i.)     The  general  assemby  shall  provide  for  the  organization  of 
cities  and  incorporated  villages  by  general  laws  restricting  their 
power  of  taxation,  assessment,  borowing  money,  contracting 

1  See  subject  considered  in  a  previous  chapter. 

(62) 


OHIO—  COUNT V    BONDS.  63 

debts  and  loaning  their  credit,  so  as  to  prevent  its  abuse.     (Ibid. 
Sec.  6.) 

COUNTIES. 

5.  County  Board:— The  board  of  county  commissioners 
consists  of  three  qualified  electors,  elected  for  a  term  of  three 
years.     They  hold  four  regular  sessions  annually  at  the  county- 
seat,  on  the  first  Mondays   of  March,   June,    September   and 
December.     Special  sessions  may  be  held  as  often  as  deemed 
necessary.     A  majority  of  the  board  constitutes  a  quorum  at 
any  meeting.     The  county  auditor   is  ex-officio  clerk  of  the 
county  board.     (839  and  847-1021.) 

6.  County    Bonds: — For   the   purpose   of  erecting    or 
providing  a  courthouse,  jail,   count)-  offices,  county  infirmary 
or  county  bridges;  for  the  purpose  of  repairing  or  improving 
the  same;  or  for  the  relief  or  support  of  the  poor,  the  county 
commissioners  may  borrow  such  sums  of  money  as  they  may 
deem    necessary  and    issue    therefor   county   bonds.     But  no 
proposition  involving  an  expenditure  of  one  thousand  dollars 
or  upwards  shall  be  agreed  to  by  the  board,  unless  twenty  days 
have  elapsed  since  its  introduction,  except  by  the  unanimous 
consent  of  all  the  members  present  taken  by  yeas  and  nays,  and 
entered  of  record.  * 

7.  How  Issued: — Said    bonds    shall    be   signed   by  the 
county  commissioners,  or  any  two  of  them,  countersigned  by 
the  auditor,  and  bear  interest  at  a  rate  not  to  exceed  six  per 
cent  per  annum,  payable  semi-annually  at  the  county  treasury, 
the  principal  to  be  payable  at  such  times  as  the  commissioners 
may  prescribe,  within  seven  years  from  date.     The  interest  on 
all  bonds  issued  for  any  of  said  purposes  shall  be  made  payable 
at  the  same  time,  the  first  payment  being  for  the  unexpired 
portion  of  time  to  the  end  of  the  first  six  months.     The  bonds 
shall  be  issued  in  sums  of  not  less  than  fifty,  nor  more  than 
one  thousand  dollars  each,  payable  to  bearer,  and  shall  specify 
distinctly  the  object  for  which  they  were  issued. 

8.  Tax  for  Payment: — The  county    commissioners   are 
required  annually  to  levy  sufficient  taxes  to  provide  for  the 


64  OHIO— COUNTY    BONDS. 

payment  of  the  maturing  interest,  and  at  least  one-seventh  of 
the  principal.  In  case  the  commissioners  refuse  or  neglect  to 
make  such  levy,  the  county  auditor  is  required  so  to  do.  (851 
to  874.) 

9.  County  Bonds  for  Children's  Home:— The   com- 
missioners of  any  county,  when  the  interests  of  the  county  so 
demand,  or  upon  the  written  request  of  two  hundred  or  more 
tax-payers,    shall    submit    the    question     of    establishing    a 
Children's  Home,  and  the  issue  of  county  bonds  therefor,  to 
the    qualified   electors  of  the   county  or   district,  at  the  next 
regular   election.     Previous   notice   of  such  election  shall   be 
published  at  least  four  weeks,  in  two  or  more  newspapers  there- 
in, stating  the  maximum  amount  of  loan  proposed  to  be  raised. 
If  a  majority  of  the  votes  at  such  election  are  in  favor  of  the 
question,  the  commissioners  are  authorized  to  provide  for  such 
Home,  and  for  the  purpose  may  issue  notes  or  bonds  of  the 
county,  bearing  interest  at  a  rate  not  to  exceed  six  per  cent, 
payable  semi-annually,  to  be  sold  at  not  less  than  par.  (929  , 
as  amended  in  1881.) 

10.  County  Bonds  for  Workhouse,  Built  Jointly  by 
Counties: — A  workhouse  may  be  built  jointly  by  adjoining 
counties,  and  bonds  may  be  issued  therefor,  as  provided  above 
in  the  case  of  county  bonds  for  other  county  buildings.     (2107 
A  to  2107  C.) 

11.  Bonds  to  Purchase  Toll  Bridges: — The  commis- 
sioners of  any  county  in  which  there  is  a  toll  bridge  may  pur- 
chase the  same  at  such  terms  as  may  be  agreed  upon,  and  for 
the  purpose  of  paying  therefor,  may  issue  county  bonds,  in  sums 
of  not  more  than  five  hundred  dollars,  payable  in  installments 
during  a  period  not  exceeding  twenty  years,  with  interest  at 
not  to  exceed  the  legal  rate,  payable  semi-annually,  to  be  sold 
at  not  less  than  par.     (4941,  4942.) 

12.  Bonds  for  County  Ditches: — The  county  commis- 
sioners of  any  county  are  authorized,  in  the  manner  provided 
by  law,  to  lay  out  ditches  upon  the  petition  of  any  interested 
owner,  where  they  find  the  same  necessary  or  conducive    to , 


OHIO  — COUNTY    BONDS.  65 

the  public  health  or  welfare,  and  to  assess  the  cost  of  the 
improvement  against  the  lands  benefited.  They  may  determine 
at  what  time,  and  in  what  number  of  sums  they  will  require 
the  same  to  be  paid,  and  whether  they  will  issue  county  bonds 
to  pay  the  cost  and  expenses  of  the  improvement,  a  record  of 
which  determination  shall  be  made  upon  their  journal. 

13.  How  Issued: — To  pay  the  expenses  of  such  improve- 
ment, bonds  may  be  issued  for  not  to  exceed  twenty  years, 
bearing  not  to  exceed  six  per  cent  interest,  payable  semi- 
annually,  and  signed  by  the  county  commissioners,  and  coun- 
tersigned by  the  county  auditor,  with  his  seal  affixed.  Such 
bonds  shall  be  sold  at  not  less  than  par.  The  commissioners 
are  required  to  make  assessments  against  the  property  benefited, 
the  proceeds  of  which  shall  be  applied  to  the  payment  of  the 
bonds  so  issued.  (4479-4482.) 

14.  Bonds  for  the  Purchase  of  Toll  Roads: — In  any 
county,  where  the  purchase  of  any  or  all  toll  roads  therein 
has  been  authorized  by  vote  at  some  general  election,  and  the 
price  thereof  has  been  fixed  by  three  appraisers  appointed,  one 
by  the  court  of  common  pleas,  one  by  the  probate  judge,  and 
one  by  the  toll  road  company,  the  county  commissioners  are 
authorized  to  make  such  purchase  if  they  are  satisfied  with  the 
price  fixed,  and  to  pay  such  company  or  companies,  owning 
such  roads  the  price  thus  agreed  upon  in  money,  or  to  issue 
bonds  of  the  county  therefor. 

15.  How  Issued: — The  bonds  issued  for  such   purpose, 
or  for  the  purpose  of  refunding  any  assessments  due  parties 
having  paid  the  same  on  account  of  such  road,  shall  be  made 
payable  at  such  times  and  in  such  amounts  as  will  be,  as  near 
as  practicable,  equal  to  the  semi-annual  collection  of  taxes 
levied  for  that  purpose.     The  bonds  shall  bear  interest  at  a 
rate  not  to  exceed  six  per  cent,  payable  semi-annually,  and  may 
be  delivered  to  such  companies  or  sold  at  not  less  than  par,  but 
no  such  bonds  shall  run  more  than  eight  years  from  date.    For 
their  payment,  the  commissioners  shall  levy  annually,  upon  the 
taxable  property  of  the  county,  a  sufficient  sum  to  pay  said 
bonds  and  interest  as  they  become  due.     (3499-3501.) 


66  OHIO— COUNTY    BONDS. 

16.  Bonds   for  Turnpike   Roads  : — For  the  purpose  of 
constructing  any  public  turnpike  road  which  has  been  author- 
ized by  a  majority  vote  of  the  qualified  electors  voting  thereon 
at  any  general  election,  the  county  commissioners  may  issue 
the  bonds  of  the  county,  payable  at  such  times  as  they  may 
deem  advisable,  with  interest  not  exceeding  the  legal  rate, 
payable  semi-annually.     Said  bonds  shall  not  be  sold  at  less 
than  par.     (4758-4773-) 

17.  Free  Turnpike  Road  Bonds  : — Upon  petition  of  a 
majority  of  all  the  resident  land  owners,  within  one  mile  of  the 
proposed  road,  the  count}r  commissioners  may  appoint  three 
commissioners   to  lay  out  and  establish  a  free  turnpike  road. 
Whenever  they  deem  it  necessary  for  the  purpose,  such  road 
commissioners  may  issue  bonds  payable  at  the  county  treasury, 
in   installments    at   intervals  not  exceeding  eight  years,  and 
bearing  interest,  at  not  to  exceed  six  per  cent. 

18.  Registry — Sale — Tax  : — Said  bonds   shall   be   regis- 
tered by  the  count)*  auditor  previous  to  their  issue,  in  a  book 
kept  for  that  purpose,  showing  the  number,   date,   amount  of 
each  bond  issued,  rate  of  interest  and  when  payable.     They 
shall  be  sold  at  not  less  than  par.     A  petition  asking  for  the 
appointment  of  such  road  commissioners  must  include  a  request 
for  the  extra  tax  or  assessment  to  be  levied  upon  the  property 
benefited  by  the  establishment  of  such  road,  which  tax  it  is  the 
duty  of  the  county  commissioners  to  direct  the  auditor  to  levy 
for  the  year  specified,   and  the  proceeds  of  which   must  be 
applied  to  the  payment  of  the  bonds  thus  issued.     (4774-4808, 
"  One  mile  assessment  pikes.") 

19.  Village  Bonds  for  the  Same  Purpose : — For  the  pur- 
pose of  constructing  any  free  turnpike  road  terminating  or 
running  through  any  village,  the  council  of  such  village  may 
levy  a  tax  or  issue  bonds  to  be  sold  at  not  less  than  par.     For 
the  payment  of  bonds  so  issued,  a  tax  of  not  to  exceed  five 
mills  on  the  dollar  may  be  levied  on  the  taxable  property  of  the 
village,  but  in  no  case  shall  such  tax  be  levied  or  bonds 
issued  until,  at  some  regular  election  held  therein,  a  majority 


OHIO— CITY    AND    VILLAGE    BONDS.  67 

of  the   qualified   electors  thereof   approve  such  tax.     (4823- 
4825,  Ibid.) 

20.  Bonds  to  Improve  Public  Roads  : — When  a  major- 
it}'  of  the  resident  land  owners  of  the  county  whose  lands  will 
be  benefited   so  petition,  the  county  commissioners  may  cause 
to   be    laid   out,   constructed  or  improved  any  public,   state, 
county  or  township  road,  and  to  assess  the  cost  of   the  same 
against  the  lands  benefited.     For  the  purpose  of  raising  the 
expenses  of  any  such  improvements,  the  commissioners  friay 
issue  county  bonds  payable  in  installments,  or  at  intervals  not 
exceeding  in  all  the  period  of  twenty  years,  and  bearing  interest 
at  not  to  exceed  six  per  cent  payable  semi-annually.     Such 
bonds  shall  be  sold  at  not  less  than  par.     The  assessments  shall 
be  divided  in  such  manner  as  to  meet  the  payment  of  the 
bonds  as  they  become  due,  and  the  cost  of  all  bridges  and 
culverts  shall  be  paid  out  of  the  general  bridge  fund  of  the 
county.     (Sees.  4829-4846,   "Two  mile  assessment  pikes,"  as 
amended  in  1883.) 

21.  City   or    Village   Bonds  for    the    Same    Purpose: — 
When  any  such  road  to  be  made  begins  or  terminates  in  a  city 
or  village,  the  corporate  authorities  thereof  may,  upon  a  rec- 
ommendation of  the  county  commissioners,  issue  bonds  of  such 
city  or  village,  in  the  same  manner,  to  an  amount  not  exceeding 
one-fifth  of  the  entire  cost  of  the  road,  but  the  entire  tax  for 
road  purposes  in  any  one  year  shall  not  exceed  five  mills  on  the 
dollar  of  the  taxable  property  in  such  corporation.1  (4850,  Ibid.) 

CITIES,  VILLAGES,  ETC.2 

22.  Classification: — This    state    has   made   a    somewhat 
elaborate  classification  of  its  cities,  evidently  to  avoid  the  pro- 
visions of  the  constitution  as  to  special  legislation.     Municipal 
corporations    are   divided   into   cities,    villages   and   hamlets. 
Cities  are  divided  into  cities  of  the  first-class  and  cities  of  the 
second  class.     Cities  of  the  first  class  are  subdivided  into  three 
grades,  the  first  grade  being  those  cities  having  July   ist,  as 

1  There  are  also  a  number  of  acts  relating  to  the  issue  of  bonds 
by  certain  counties  for  the  purchase  of  toll  roads,  construction  of  high- 
ways, etc. ,  appearing  as  Sections  8038  to  8063  of  the  Revised  Statutes. 

2  Also  see  \\  19  and  21. 


68  OHIO — CITY    AND   VILLAGE    BONDS. 

shown  by  the  last  preceding  federal  census,  more  than  two 
hundred  thousand  inhabitants  (Cincinnati1);  the  second  grade, 
those  shown  in  the  same  way  to  have  more  than  ninety  thou- 
sand and  less  than  two  hundred  thousand  (Cleveland);  the 
the  third  grade,  those  with  more  than  thirty-one  thousand  five 
hundred  and  less  than  ninety  thousand  (Toledo).  Cities  of 
the  second  class  are  subdivided  into  four  grades,  the  first  grade, 
those  shown  in  the  manner  above  provided,  to  have  more  than 
thirty  thousand  five  hundred,  and  less  than  thirty-one  thousand 
five  hundred  (Columbus);  second  grade,  those  with  more  than 
twenty  thousand  and  less  than  thirty  thousand  five  hundred 
(Dayton);  third  grade,  with  more  than  ten  thousand  and 
less  than  twenty  thousand;  and  fourth  grade,  those  with 
more  than  five  thousand  and  less  than  ten  thousand.  Munici- 
pal corporations  having  more  than  three  thousand  and  less  than 
five  thousand  population,  as  above  determined,  are  villages  of 
the  first  class,  and  those  having  more  than  two  hundred  and 
less  than  three  thousand,  are  villages  of  the  second  class. 
Other  incorporated  villages  for  special  purposes  are  known  as 
hamlets.2  (1546-1552.) 

23.  Bonds  to  Extend  Payment  of  Indebtedness  : — 

The  trustees  or  council  of  any  municipal  corporation,  for  the 
purpose  of  extending  the  time  of  the  payment  of  any  indebt- 
edness, which  from  its  limit  of  taxation  it  is  unable  to  pay  at 
maturity,  may  issue  bonds  or  borrow  money,  so  as  to  change 
but  not  increase  the  indebtedness,  in  such  amounts,  for  such 
length  of  time,  and  at  such  rate  of  interest,  not  exceeding  eight 
per  cent  per  annum,  as  the  council  or  trustees  may  deem 
proper.  Such  bonds  shall  express  upon  their  face  the  purpose 
for  which  they  were  issued,  and  under  what  ordinance.  (2701.) 

24.  Bonds  in  Anticipation  of  Special  Assessments : 

— The  council  of  any  municipal  corporation  making  any  au- 
thorized special  assessment,  may  borrow  upon  the  credit  of  the 
corporation,  money  sufficient  to  pay  the  cost  of  the  improve- 

1  This  classification  when  made,  under  the  federal  census  of  1870, 
placed  the  larger  cities  in  the  state,  as  above  indicated. 

2  See  subject  considered,  pp.  40-41,  herein. 


OHIO — CITY   AND   VILLAGE    BONDS.  69 

ment,  and  issue  therefor  notes  or  other  certificates  of  indebted- 
ness, bearing  interest  at  a  rate  not  to  exceed  seven  per  cent  per 
annum,  payable  annually,  to  be  sold  at  not  less  than  par. 
(2704-2705.)  Street  improvement  bonds  of  the  city  of  Colum- 
bus are  payable  seven  years  from  date,  but  redeemable  at  any 
time  at  option  of  city,  and  have  the  interest  payable  semi- 
annually.  (2352.) 

25.  How  Issued. — All   bonds,    notes    or    certificates    of 
indebtedness  issued  by  municipal  corporations  shall  be  signed 
by  the  mayor  and  by  the  auditor,  comptroller  or  clerk  thereof, 
and  be  sealed  with  the  seal  of  the  corporation.     When  issued 
for  street  improvements,  they  shall  have  the  name  of  the  street  or 
portion  thereof  so  improved,  and  for  which  the  same  were  issued, 
written  or  printed  thereon.     Where  the  corporation  is  divided 
into  districts  for  sewerage  purposes,  bonds  issued  for  construct- 
ing or  repairing  sewers  therein,  shall  have  the  name  of  the 
district  for  which  they  were  issued  so  written  or  printed  thereon. 
Bonds  may  have  interest  coupons  attached  at  the  discretion  of 
the  council.     (2706  to  2708.) 

26.  Sale  of  Bonds : — Whenever   any  municipal  corpora- 
tion shall  issue  its  bonds,  it  shall  first  offer  them  at  par  and 
accrued  interest,  to  the  trustees,  commissioners  or  other  officers 
of  such  corporation  having  official  charge  of  its  sinking  fund 
or  debt,  and  only  after  their  refusal  to  take  all  or  any  of  such 
bonds,  shall  any  of  them  be  advertised  or  offered  for  public  sale. 
In  no  case  shall  they  be  sold  at  less  than  par.     Sales  other  than 
to  the  sinking  fund  shall  be  to  the  highest  bidder,  after  thirty 
days'  notice  in  at  least  two  newspapers  of  general  circulation 
in  the  county  in  which  such  municipal  corporation  is  situated, 
setting  forth  the  nature,  amount,  rate  of  interest  and  time  to 
run  of  such  bonds,  with  the  time  and  place  of  sale.     (2709,  as 
amended  1883.) 

27.  Exchange  of  Coupori  for  Registered  Bonds  :  — 

(Cincinnati.) — Cities  of  the  first  grade  of  the  first  class,  on 
demand  of  the  owner  or  holder  of  its  coupon  bonds,  shall  issue 
in  lieu  thereof  registered  bonds  of  such  city  of  like  amount, 


7O  OHIO — CITY    AND    VILLAGE   BONDS. 

time,  rate  of  interest  and  tenor.  A  complete  record  of  all  such 
registered  bonds  issued  shall  be  kept,  and  payment  thereof  made 
only  to  the  order  of  the  person  in  whose  name  the  same  are 
registered.  (2711.) 

28.  Tax  for  Sinking  Fund: — For  the  purpose  of  creat- 
ing  a  sinking   fund   for   the   gradual  extinguishment  of  the 
bonds  and  funded  debt  of  a  municipal  corporation,  the  council 
may  annually,  to  make  provision  for  the  full  payment  thereof, 
levy  and  collect,  in  addition  to  other   taxes,  a  tax  of  not  less 
than  one  or  more  than  three  mills  upon  the  taxable  property  of 
the  corporation.    In  case  of  bonds  issued  for  sewerage  purposes, 
where  the  corporation  is  divided  into  sewerage  districts,  such 
levy  shall  be  upon  the  property  of  the  district  for  which  the 
bonds  were  issued.     (2712,  2713.) 

29.  Refunding    Bonds    by  Fund    Commissioners  of 
Certain  Cities: — The  sinking  fund  commissioners  in  cities  of 
the  first  and  third  grades  of  the  first  class,  and  of  the  first  grade 
of  the  second  class  (Cincinnati,  Toledo  and  Columbus),  for  the 
purpose  of  refunding  the  bonded  indebtedness  thereof,  exclu- 
sive of  street  improvement  bonds,  at  a  lower  rate  of  interest, 
and  for  the  purpose  of  paying  for  any  real  estate  held  by  such 
city  under  perpetual  leases,  where  the  interest  on  such  bonds 
will  be  less  than  the  rental  of  such  real   estate,  may    issue 
coupons  or  registered  bonds,  due  in  fifty  years,  and  redeemable 
after  thirty  years,  bearing  interest  at  not  to  exceed  five  per  cent, 
payable  semi-annually,  and  to  an  aggregate  amount  not  exceed- 
ing twenty-six  millions.     Such  bonds  shall  be  known  as  the 
Cincinnati  (or  as  the  case  may  be)  Consolidated  Sinking  Fund 
Bonds.     They  shall  be  signed  by  the  president  and  treasurer 
of  the  sinking  fund,  countersigned  by  the  city  auditor  with  the 
city  seal  affixed.     If  issued  for  refunding   any  bonded  debt, 
payable  out  of  a  special  fund  or  from  a  special  revenue,  they 
shall  show  the  debt  to  which  it  is  applicable.    (2729   a,  et  seq.} 

30.  City  and  Village  Bonds  for  Fire  Engines,  etc.: — 
Any  incorporated  village  with  a  population  of  not  less  than 
two  thousand,  or  any  city  not  provided  with  sufficient  appara- 


OHIO  — CITY,    VILLAGE    AND   TOWNSHIP    BONDS.  71 

tus  for  fire  protection,  for  the  purpose  of  purchasing  a  fire 
engine  or  other  apparatus,  the  council  thereof  may  issue  bonds 
bearing  interest  at  not  to  exceed  seven  per  cent,  payable  semi- 
annually.  Such  issue  of  bonds  must  first  be  submitted  to  and 
approved  by  a  majority  of  two-thirds  of  the  qualified  electors 
of  such  city  or  village  voting  at  a  regular  election  on  the  ques- 
tion of  borrowing  such  money.  A  majority  vote  of  the 
council  must  pass  a  resolution  submitting  the  question  to  such 
vote,  and  ten  days'  notice  of  such  election  must  be  given  by 
publication  in  some  newspaper  of  general  circulation  in  such 
city  or  village.  (8304  to  8305,  Act  of  1878.) 

31.  Bonds  for  Market  Houses  and  City  Buildings: — 
The  council  of  any  city  of  the  second  class,  third  grade,  two- 
thirds  of  the  elected  members  concurring,    may  issue  bonds 
for  the  purpose  of  erecting  a  market  house   and  city    offices 
and  the  procuring  of  the  necessary  real  estate  therefor,  when 
authorized    by   two-thirds  of  the  electors  voting  on  such  ques- 
tion submitted  at  an  annual  or  special  election.     Ten  days' 
notice  of  such  election  must  be  given  by  publication  in  one  or 
more  newspapers  of  general  circulation  in  the  city. 

32.  How  Issued — Amount: — Said  bonds  may  be  issued  in 
denominations  of  not  less  than  five  hundred  dollars,  payable  at 
any  time  within  forty  years,  at  a  rate  of  interest  not  exceeding  six 
per  cent,  payable  semi-annually,  and  shall  be  issued,  advertised 
and  sold  according  to  the  law  governing  other  city  bonds. 
The  amount  of  bonds  so  issued  shall  not  exceed  one  hundred 
and  fifty  thousand  dollars.     (Act  of  1887,  page  30.) 

33.  Township    Bonds    for    Cemetery     Vault: — The 
trustees  of  any  township  are  authorized  to  levy  a  tax  to  pur- 
chase a  hearse  and  build  a  vault  for  the  use  of  the  township, 
when  authorized  by  a  majority  of  the  votes  cast  at  some  gen- 
eral election,  after  twenty  days'  notice  by  posting  in  at  least 
three  public  places  therein,  stating  the  amount,  and  purpose  for 
which  such  money  is  to  be  raised.     In  anticipation  of  such  tax 
the  trustees    may  issue   township  bonds,  not  exceeding  the 
amount  of  such  tax  voted,  in  denominations  of  not  less  than 


72  OHIO — SCHOOL   BONDS. 

fifty  dollars,  bear  interest  at  not  to  exceed  six  per  cent,  and 
payable  not  later  than  four  years  from  date.  The  bonds  shall 
be  signed  by  the  trustee,  countersigned  by  the  township  clerk, 
shall  be  sold  at  not  less  than  par,  and  repaid  from  such  tax 
when  collected.  (1485  to  1487.) 

34.  Village  Bonds  for  Same  Purpose: — When  authorized, 
as  in  the  case  of  townships,  the  council  of  any  village  may 
levy  a  tax  to  purchase  a  hearse  or  to  construct  a  vault  for  the 
use  of  such  village,  and  issue  village  bonds  to  the  amount  of 
such   tax,  substantially  in  the  same  manner  and  form  as  pro- 
vided in  the  case  of  townships,  but  payable  not  later  than  two 
years  from  date,  and  signed  by  the  mayor  and  clerk  of  the  vil- 
lage.    (2556  to  2558.) 

35.  Joint   Township    Refunding    Bonds: — When  the 
township  has  been  divided  into  two  or  more  parts  subsequent 
to  the  original  issue  of  bonds  for  purposes  of  public  improve- 
ment, it  shall  be  competent  for  the  authorities  of  the  parts  so 
divided,  jointly  to  issue  new  bonds  for  the  amount  becoming 
due.     (1489.) 

SCHOOL  BONDS. 

36.  School    Districts     Classified: — Each    city,  which 
with  the  territory  annexed  for  school  purposes,  and   excluding 
any  detached  for  such  purposes,  had  a  population  of  two  hun- 
dred and  fifty  thousand  or  more  by  the  last  preceding  United 
States  census,  constitutes  a  city  district  of  the  first  grade  of  the 
first  class.     Each  city  which  has,  as  ascertained  in  the  same 
manner,   a  population  of  one  hundred  and  fifty  thousand  or 
more,  and  less  than  two  hundred  and  fifty  thousand,  constitutes 
a  city  district  of  the  second  grade  of  the  first  class;  each  city 
which  thus  has  a  population  of  ten  thousand  and  less  than  one 
hundred  and  fifty  thousand,  constitutes  a  city  district  of  the 
first  class.     Each  city  of  the  second  class  thus  having  a  popu- 
lation of  less  than  ten  thousand,  constitutes  a  city  district  of 
the  second  class.     Villages,  with  the  territory  thus  belonging 
thereto  for  school  purposes,  are  village  districts.     Organized 
townships,   exclusive  of  any  territory  therein  included  in   a 


OHIO — SCHOOL    BONDS.  73 

city,  village  or  special  district,  are  township  districts;  and  any 
other  districts  legally  established  under  any  special  act  or 
otherwise,  for  school  purposes  are  known  as  special  school  dis- 
tricts. The  school  affairs  of  the  several  school  districts  are 
managed  by  boards  of  education.  (3885  to  3891,  as  amended 
in  1887.) 

37.  School  District  Bonds  : — When  the  board  of  edu- 
cation of  any  school  district,  except  in  city  districts  of  the  first 
class,  determines  that  it  is  necessary,  for  the  proper  accommo- 
dation of  the  schools  of  such  district,  to  purchase  a  site  and 
erect  a  schoolhouse  thereon,  and  ascertains  that  such  purpose 
and  the  furnishing  of  such  schoolhouse  requires  a  greater  tax 
upon  the  property  of  the  district  than  the  board  is  authorized 
to  levy,  and  that  to  provide  means  therefor  it  will  be  necessary 
to  issue  bonds,  the  board  shall  make  an  estimate  of  the  amount 
required  for  such  purposes,   and  at  a  general  election,   or  a 
special  election  called  for  the  purpose,  shall  submit  to  the  elec- 
tors of  the  district  the  question  of  levying  taxes  for  such  pur- 
poses, or  either  of  them,  and  whether  the  levy  shall  be  made 
from  time  to  time,  and  what  amount  shall  be  levied  each  year 
until  such  amount  is  raised.     Ten  days'  notice  of  such  election 
shall  be  given  by  posters,  put  up  in  five  of  the  most  public 
places  in  the  district,  stating  the  time,  place  and  object  of  the 
election. 

38.  How  Issued : — If  a  majority  of  the  electors  at  such 
election  vote  in  favor  of  such  tax  levy,  the  same  shall  be  certi- 
fied to  the  county  auditor  and  made  as  authorized.     Thereupon 
the  board  to  anticipate  the  money  so  to  be  raised  may  borrow 
a  sum,  not  exceeding  the  amount  so  authorized  to  be  levied, 
and  issue  bonds  therefor,  payable  as  indicated  by  such  vote, 
and  bearing  interest  at  not  to  exceed  six  per  cent  per  annum, 
payable  semi-annually.     The  bonds  shall  be  in  such  sums  as 
the  board  may  determine,  be  numbered  consecutively,  payable 
to  bearer,  dated-  the  date  of  sale,  and  signed  by  the  board 
officially.     The  clerk  of  the  board  shall  keep  a  record  of  the 
number,  date,  amount,  the  rate  of  interest  and  the  name  of 
the  person  to  whom  sold  and  the  time  when  payable.     The 


74  OHIO— SALE   OF   BONDS — SPECIAL    ACTS. 

bonds  shall  not  be  sold  at  less  than  par,  nor  bear  interest  until 
the  purchase  money  for  the  same  shall  have  been  paid.  (3991- 
39930 

39.  School  Bonds  in  City  Districts  of  the  First  Class: 
—The  board  of  education  of  any  school  district  of  the  first  class, 
except  a  district  embracing  a  city  of  the  first  grade  of  the  first 
class  (Cincinnati),  may  issue  bonds  to  obtain  or  improve  public 
school  property,  and  in  anticipation  of  income  from  taxes  for  such 
purpose,  levied   or  to  be  levied,   may,   from  time  to  time  as 
occasion  requires,  issue  and  sell  bonds  under  the  restrictions, 
and  bearing  the  rate  of  interest  specified  in  the  preceding  sec- 
tion in  the  case  of  other  school  district  bonds,  but  no  greater 
amount  of  such  bonds  shall  be  issued  in  any  one  year,  than  will 
equal  the  aggregate  of  a  tax  at  the  rate  of  two  mills  for  the 
previous  year.     An  order  to  issue  such  bonds  shall  be  made 
only   at  a  regular  meeting  of  the  board  and   by  vote  of  a 
majority   of    all   the   members,   taken   by  yeas  and  nays,  and 
entered  on  the  journal  thereof.     (3994.) 

GENERAL. 

40.  Sale   of    Bonds: — All  bonds  issued    by   boards  of 
county  commissioners,  boards  of  education,  commissioners  of 
free  turnpikes,  shall  be  sold  to  the  highest  bidder,  after  being 
advertised  three  times  weekly  in  a  newspaper  of  general  circu- 
lation in  the  county,  and  if  the  amount  of  bonds  exceeds  twenty 
thousand  dollars,  in  an  additional  newspaper  of  general  circula- 
tion in  the  state  three  times  weekly.     The  advertisement  shall 
state  the  total  amount  of  bonds  to  be  sold,  the  amount  of  each 
bond,  how  long  they  are  to  run,  the  rate  of  interest,  whether 
payable  annually  or  semi-annually,  the  law  or  section  of  law 
authorizing  their  issue,  the  date,  hour  and  place  of  sale.     No 
such  bonds  shall  be  sold  for  less  than  par  and  accrued  interest, 
and  the  privilege  of  rejecting  any  or  all  bids  shall  be  reserved, 
and  said  bonds  may  be  again  advertised   for  sale.       (Act  of 
March  22,  1883,     page  68.) 

41.  Note: — Special  Acts    Relating   to  Bond   Issues:  — 
Among  the  general  statutes  and  session  laws  of  this  state  are  a 


OHIO — SPECIAL  ACTS.  75 

large  number  of  acts  authorizing  or  relating  to  the  issue  of 
bonds,  the  provisions  of  which  are  applicable  only  to  one  or 
more  particular  counties,  cities  or  other  municipalities.  Many 
such  acts  refer  to  the  issue  of  bonds  for  various  city  improve- 
ments and  purposes  in  Cincinnati,  Cleveland,  Toledo,  Colum- 
bus and  other  large  cities  of  the  state,  by  classes  and  grades. 
Other  such  acts  by  their  terms  refer  to  cities,  villages  or 
counties  having  at  a  certain  specified  census  a  designated  pop- 
ulation, or  a  population  within  such  specified  numbers,  as  would 
confine  the  act  to  one  particular  municipality.  Whatever  may 
be  the  legal  aspect  of  some  of  these  acts,  which  is  discussed 
elsewhere1,  they  are  in  effect  special  acts,  and  it  would  be 
altogether  impracticable  to  attempt  a  digest  of  their  provisions 
in  this  work.  In  the  case  of  bonds  issued  under  any  such 
acts,  reference  must  be  made  to  the  act  itself. 

1  See  p.  40,  et  seq.,  herein. 


CHAPTER  VIII. 


INDIANA. 


References  are  to   the  Revised  Statutes  of  1888,  except  as  otherwise 

indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  Adopted  in  1851. 

1.  State  Indebtedness: — No  debt  can  be  contracted  in 
behalf  of  the  state,  except  to  meet  casual  deficits  in  the  reve- 
nue, to  pay  interest  on  the  state  debt,  to  repel  invasion,  sup- 
press insurrection,  or,  if  hostilities  be  threatened,  to  provide 
for  the  public  defense.     The  state  is  prohibited  from  assuming 
the  debts  of  any  municipality  or  corporation.     (Art.  10,  Sec. 
66.) 

2.  Municipal  Indebtedness: — No  political   or  munic- 
ipal corporation  shall  ever  become  indebted,  in  any  manner,  or 
for  any  purpose,  to  an  amount  in  the  aggregate  exceeding  two 
per  cent  of  the  taxable  property  within  such  corporation,  to  be 
ascertained  by  the  last  assessment  for  state  and  county  taxes 
previous  to  the  incurring  of  such  indebtedness;  and  all  bonds 
or  obligations  in  excess  of  such  amount  shall  be  void.     Pro- 
vided that  in  the  time  of  war,  foreign  invasion  or  other  public 
calamity,  on  petition  of  a  majority  of  the  property  owners,  in 
number  and  value,  within  such  corporation,  the  public  author- 
ities, in  their  discretion,  may  incur  obligations  necessary  for 
the  public  protection  and  defense,  to  such  an  amount  as  may  be 
requested  in  such  petition.     (Art.  13,  as  amended  March  i4th, 
1881.) 

3.  Municipal    Subscriptions: — No  county  shall    sub- 
scribe for  stock  in  any  incorporated  company,  unless  the  same 
shall  be  paid  for  at  the  time  of  such  subscription,  nor  loan  its 
credit  to,  nor  borrow  money  for  the  purpose  of  taking  stock  in 
any  such  company.     (Art.  10,  Sec.  6.) 

(76) 


INDIANA — COUNTY    BONDS.  77 

4.  Special     Legislation: — The    General    Assembly    is 
prohibited   from  passing  local  or  special  laws,  for  regulating 
county  and  township  business,  the  assessment  and  collection  of 
taxes,  and  other  cases  enumerated;  and  also  in  all  other  cases 
where  a  general  law  can  be  made  applicable,  all  laws  shall  be 
general.     (Art.  4,  Sec.  22-23.) 

COUNTIES. 

5.  County  Board: — The  corporate  powers  of  counties 
are  exercised  by  a  board  of  three  commissioners,   under  the 

name  of  ' '  County  Commissioners  of  the  County  of " 

Regular  sessions  of  the  board  are  held  on  the  first  Monday  in 
March,  June,  September  and  December  in  each  year.      Special 
sessions   may  be    called,   whenever    required    by   the  public 
interests,  by  the  county  auditor,  or  in  case  of  his  death  or  dis- 
qualification, by  the  clerk  of  the  circuit  court,  or  in  case  of  the 
disqualification  of  both  auditor  and  clerk,  by  the  recorder.    At 
least  six  days'  notice  of  a  special  session  shall  be  given,  unless 
in  the  opinion  of  the  officer  calling  the  same,  an  emergency 
exists  requiring  a  shorter  notice,  and  in  that  case  the  officer 
may  fix  the  time  at  his  discretion.1     The  county  auditor  is  ex- 
officio  clerk  of  the  board.     (5731-5740,  5895.) 

6.  County  Bonds  for  Public  Buildings    and    Fund- 
ing:— Whenever  it  shall  be  necessary  to  construct,  complete  or 
repair  the  courthouse,  jail  or  other  county  buildings,  or  when- 
ever it  may  be  desirable  to  fund  or  average  any  existing  debt 
incurred  for  county  purposes,  and   the  revenues  afforded  by 
reasonable  taxation  are  insufficient  therefor,  the  county  com- 
missioners may  borrow  for  that  purpose  any  sum  not  exceed- 
ing one  per  cent  on  the  assessed  valuation  of  the  real  and 
personal  property  of  the  county,  and  issue  bonds  therefor,  •  in 
amounts  of  not  less  than  $25  each,  and  bearing  a  rate  of  inter- 
est not  exceeding  the  legal  rate  in  the  state  or  territory  where 
the  same  are  negotiated,  not  exceeding  ten  per  cent  per  annum. 
Provided  that  no  subsequent  loan  shall  be  made  or  author- 

1  The  judgment  of  the  auditor  or  officer  calling  a  special  meeting 
seems  to  be  conclusive  as  to  the  public  interest  requiring  the  same. 
Oliver  v.  Keightly,  24lnd.,  514. 


78  INDIANA — COUNTY    BONDS. 

ized     *     *     *     *     as  long  as  any  former  loan,  made  under  the 
provisions  of  this  act,  shall  remain  unpaid.1     (5749.) 

7.  Form  and  Sale  of  Bonds : — The  form  of  such  bonds 
shall  be  substantially  as  follows  : 

STATE  OF  INDIANA,  COUNTY  OF 

The  county  of will  pay  to  the  bearer ....  years 

from  the  date  hereof,  the  sum  of. . .  .dollars  and. . .  .cents,  with 
interest  thereon  at  the  rate  of. . .  .per  cent,  payable  annually,2 

at ,  in  the  state  of on  the ....  day  of. ...  in 

each  year. 

Commissioners  of  County. 

And  attached  to  each  bond  shall  be  a  certificate  by  the 
county  auditor  as  follows  : 

I ,  County  Auditor,  do  hereby  certify  that  the 

annexed  bond  was  issued  to  the  County  Treasurer  this ....  day 

of ,  A.  D.,  1 8 . .      In  testimony  whereof  I  have  hereunto 

set  my  hand  and  affixed  the  seal  of  said  Board  of  County  Com- 
missioners, this ....  day  of . . . . ,  18 . . 

County  Auditor. 

The  bonds  shall  be  delivered  by  the  county  auditor  to 
the  county  treasurer,  and  not  sold  at  a  greater  discount  than 
eight  per  cent. 

8.  Special  Tax : — The  county  commissioners  are  required 
to  levy  a  tax  of  not  less  than  one-tenth  of  one  per  cent  on  the 
taxable  property  of  the  county,  to  constitute  a  sinking  fund  for 
the  payment  of  such  bonds  as  they  mature,  and  also  by  a  spe- 
cific levy  to  provide  by  taxation  for  the  annual  interest  thereon. 
(5749-5754-) 

9.  Courthouse  Bonds,   Act  of  1885 : — In  counties  where 
the  construction  of  a  courthouse  was  commenced  and  entered 
upon  before  January  i,  1885,  and  in  which  the  ordinary  rev- 

1  The  above  proviso  only  forbids  a  further  loan  when  prior  loans 
unpaid  reach  the  limit  of  one  per  cent.     (56  Ind.,  550.) 

2  Interest  may  be  made  payable  semi-annually  since  April  8,  1885. 
(L/aws  of  1885,  Chap.  45,  p.  149.)    Prior  to  that  date  no  authority  existed 
to  issue  bonds  with  interest  payable  otherwise  than  annually.     English 
v.  Smock;  34  Ind.,  115.  * 


INDIANA— COUNTY    BONDS.  79 

enues,  together  with  one  per  cent  of  the  taxable  property 
thereof,  are  insufficient  for  its  completion,  the  commissioners 
are  authorized  for  the  purpose  of  completing  the  same,  to  issue 
bonds  in  amounts  not  to  exceed  one  per  cent  of  the  assessed 
valuation,  in  addition  to  bonds  previously  issued,  provided  the 
courthouse  was  under  construction  at  the  date  of  the  passage 
of  this  act,  and  the  exigencies  of  the  case  absolutely  demand 
such  issue.  (Laws  of  1885,  Chap.  39,  p.  70.) 

10.  Funding  Bonds  : — Where  the  aggregate  indebted- 
ness of  the  county  having  a  voting  population  of  over  twenty 
thousand,  as  shown  by  the  vote  for  governor  at  the  last  pre- 
ceeding  election,  amounts  to  or  exceeds,  at  the  date  of  the 
passage  of  this  act,  one  per  cent  of  the  taxables  of  the  county 
for  the  current  year,  the  county  commissioners  may  fund  all  or 
any  part  of  such  outstanding  indebtedness  with  bonds  bearing 
not  to  exceed  six  per  cent  interest,  payable  annually  or  semi- 
annually,  at  such  time  and  place  as  the  board  may  provide  by 
an   order  spread  upon  the  record  of  its  proceedings.     Such 
bonds  can  only  be  issued  to  fund  or  pay  bonds  or  other  eviden- 
ces of  county  indebtedness  existing  at  the  passage  of  this  act, 
and  in  amount  not  in  excess  of  such  indebtedness.     (5816- 
5817,  in  force  March  7,  1879.) 

11.  Temporary  Loans — Limitations: — Whenever  the 
aggregate  indebtedness  of  any  county  having  a  voting  popula- 
tion of  twenty  thousand,  as  shown  by  the  last  vote  for  gov- 
ernor, reaches  one  per  cent  of  the  county's  taxables,  no  further 
indebtedness  can  be  incurred  in  any  manner  or  form,  except 
temporary  loans  in  anticipation  of  the  revenue  of  the  current 
fiscal  year,  payable  out  of  such  revenue  and  within  such  fiscal 
year,  and  not  exceeding  two-thirds  of  the  tax  duplicate  of  the 
preceding  year.     No  such  temporary  loans  shall  be  made  until 
all  temporary  loans  upon  the  revenue  of  any  preceding  year 
have  been  fully  paid.     Any  ordinance,  order,  resolution,  obli- 
gation, contract,  note  or  other  evidence  of  indebtedness  to 
increase  the  debt  of  such  county,  except  as  herein  provided, 
shall  be  absolutely  null  and  void.     (5818.) 

12.  Limit  of  Tax  : — The  limit  of  taxation  for  one  year 


80  INDIANA — TURNPIKE    ROAD    BONDS. 

is  for  county  purposes  thirty-three  cents  on  the  one  hundred 
dollars,  and  for  township  purposes  three  cents,  except  for  the 
township  wherein  is  located  the  county  seat,  where  it  is  limited 
to  one  per  cent  on  the  one  hundred  dollars.  (5819.) 

13.  Turnpike  Road  Bonds  : — For  the  purpose  of  con- 
structing or  improving  any  state  or  county  road,  the  board  of 
county  commissioners  of  any  county,  are  authorized  to  issue 
bonds  of  the  county,  in  the  aggregate  not  exceeding  one-half 
per  cent  of  the  taxable  property  of  the  county,  maturing  at 
annual  intervals  after  two  years,  and  not  exceeding  eight  years, 
bearing  interest  at  a  rate  not  to  exceed  six  per  cent  per  annum, 
payable  semi-annually,  to  be  sold  at  not  less  than  their  par 
value. 

14.  Improvement,  How  Made  : — Upon  the  presentation  to 
the  board  of  a  petition  describing  the  improvement  desired,  and 
signed  by  five  or  more  of  the  landholders  whose  lands  will  be 
assessed  for  the  costs  of  the  improvement,  and  the  filing  of  a 
bond  to  protect  the  county  against  the  preliminary  expenses, 
the  board  shall  appoint  three  disinterested  freeholders,  with  a 
competent  surveyor  and  engineer,  as  viewers,  to  examine  and 
lay  out  said  road,  and  to  assess  and  determine  the  damages  to 
any  premises  through  which  it  shall  pass.     Notice  of  the  meet- 
ing of  said  viewers,  describing  the  proposed  improvement,  shall 
be  given  by  the  auditor  by  publication  for  three  consecutive 
weeks  previously.     At  the  next  regular  session  of  the  commis- 
sioners, the  viewers  shall  make  a  report  showing  the  public 
necessity    of    the    contemplated    improvement,    the   damages 
claimed,  and  by  whom,  the  amount  assessed  to  each  claimant, 
an  estimate  of  the  expenses  thereof,  and  the  benefited  lots  or 
lands  lying  within  two  miles  of  such  improvement.     There- 
upon, if  public  utility  requires  it,  the  commissioners  shall  enter 
an  order  that  the  improvement  be  made,  describing  the  same, 
and  the  lands  to  be  assessed  for  the  expense  thereof.     But  such 
order  shall  not  be  made  until  a  majority  of  the  resident  land- 
holders of  the  county  whose  lands  are  reported  as  benefited, 
and  ought  to  be  assessed,  and  also  the  owners  of  the  majority 
of  the  whole  number  of  acres  of  all  lands  that  are  reported  as 


INDIANA — TURNPIKE    ROAD    BONDS.  8 1 

so  benefited,  shall  have  subscribed  to  the  petition  first  men- 
tioned, but  minor  heirs,  unless  represented  by  a  legal  guardian, 
shall  not  be  counted. 

15. — Assessments  of  Benefits: — Upon  making  such  order 
the  commissioners  shall  appoint  three  disinterested  freeholders 
to  apportion  the  estimated  expense  of  said  improvement  upon 
the  property  embraced  in  the  order,  and  report  the  same  to  the 
county  auditor,  who  shall  give  notice  by  publication,  for  at  least 
three  consecutive  weeks,  of  the  time  when  the  commissioners 
shall  meet  to  consider  said  report.  The  commissioners  may 
confirm  or  amend  said  report,  or  refer  the  same  to  a  new  com- 
mittee for  re-assessment,  upon  whose  report  the  same  action 
shall  be  taken.  The  final  action  of  the  commissioners  shall  be 
entered  upon  their  records,  together  with  the  report  as  con- 
firmed, with  the  estimated  expense  apportioned.  The  assess- 
ment constitutes  a  first  lien  on  the  real  estate  assessed,  and 
shall  be  divided  in  such  manner  as  to  meet  the  payment  of  the 
principal  and  interest  of  the  bonds  issued  as  above,  collected 
as  other  taxes,  and  applied  only  to  such  purpose.  (5091-5097, 
as  amended  by  Chap.  31,  p.  35,  Acts  of  '83.) 

16.  Cities  or  Towns  May  Issue  Such  Bonds: — When  any 
road  to  be  improved,  as  above,  begins  or  terminates  in  a  city 
or  incorporated  town,  said  city  or  town  may,  upon  the  recom- 
mendation of  the  county  commissioners,  agree  to  pay  in  the 
bonds  of  such  city  or  town  (issued  as  above  in  the  case  of 
counties)  in  addition  to  any  amount  that  may  be  assessed  upon 
the  real  property  of  such  city  or  town,  an  amount  not  exceed- 
ing one-fifth  of  the  entire  cost  of  said  road,  providing  that  the 
entire  tax  imposed  for  road  purposes  hereunder,  shall  not  in 
any  one  year  exceed  fifty  cents  on  the  one  hundred  dollars. 

17.  Note: — By  an  act  approved  April  8,  1885,  the  board 
of  commissioners  of  any  county  are  authorized  to  construct  or 
improve  any  state  or  county  road,  substantially  in  the  same 
manner,  and    under   provisions   very  similar  to  the  above, 
except  that  it  provides  that  the  original  petition  presented 
to  the  board  shall,  in  the  first  place,  be  signed  by  a  majority 


82  INDIANA — ROAD   BONDS. 

of  the  resident  landholders  of  the  county,  whose  lands  are 
within  two  miles  of  the  proposed  improvement,  and  does  not 
require  a  preliminary  bond.  The  viewers  first  appointed  are 
authorized  to  apportion  the  estimated  costs,  expenses  and  dam- 
ages upon  benefited  lands  within  such  two  miles.  It  further 
provides  for  a  superintendent  of  such  improvement,  and  the 
execution  by  him  of  negotiable  certificates,  bearing  six  per  cent 
interest,  for  the  sum  assessed  against  each  tract  of  land,  for  the 
payment  of  such  assessment,  in  six  equal  installments,  in  six  to 
thirty-six  months  from  the  dates  of  such  certificates;  that  the 
whole  amount  thereof  may  be  paid  at  any  time;  and  the  cer- 
tificates may  be  given  for  any  sum  due  on  account  of  such 
improvement,  or  negotiated  at  not  less  than  par.  This  act  does 
not  provide  for  the  issuing  of  bonds  by  tha  county,  but  includes 
substantially  the  same  provisions  as  the  former  act  as  to  any 
city  or  town  issuing  bonds.1  (Chap.  57,  Acts  of  1885.) 

18.  Purchase  of  Toll  Roads: — The  county  commis- 
sioners of  any  county,  when  petitioned  by  fifty  citizen  free- 
holders, shall  submit  the  question  of  purchasing  the  toll  roads 
of  the  county,  to  the  voters  thereof,  at  any  regular  spring  or 
fall  election,  or  when  no  such  election  is  near  at  hand,  at  any 
special  election  called  by  giving  at  least  twenty  days'  public 
notice.  If  a  majority  of  those  voting  are  in  favor  thereof,  and 
a  majority  of  the  commissioners  conclude  to  make  such  pur- 
chase, they  shall  enter  an  order  to  that  effect.  Thereupon 
there  shall  be  appointed  as  appraisers,  for  each  road  to  be  pur- 
chased, three  competent,  disinterested  freeholders  and  house- 
holders; one  by  the  commissioners,  one  by  the  judge  of  the 
circuit  court  of  the  county,  and  one  by  the  directors  of  the  road 

1  It  has  been  expressly  decided  that  this  does  not  repeal  previous 
acts  on  the  same  subject.  Robinson  v.  Rippey,  in  Ind.,  112,  County  of 
Montgomery  v.  Fullen,  Id.,  410  (1887.) 

The  proceedings  and  orders  of  county  boards  establishing  a  free 
gravel  road,  over  which  they  have  jurisdiction,  cannot  be  collaterally 
impeached  unless  absolutely  void.  Also  bonds  issued  by  county  commis- 
sioners under  the  above  provisions  do  not  constitute  a  county  indebted- 
ness within  the  meaning  of  Article  13  of  the  Constitution  ;  they  being 
payable  out  of  the  particular  money  derived  from  the  assessment  on 
adjacent  lands,  and  from  no  other  source.  Strieb  v.  Cox,  in  Ind.,  299 
(1887).  See  pp.  32-36  herein. 


INDIANA — ROAD    BONDS.  83 

to  be  purchased.  The  appraisers,  after  being  duly  qualified, 
shall  within  twenty  days  after  their  appointment  make  an 
appraisement  of  the  road,  and  within  thirty  days  after  such 
appraisement  they  shall  make  a  written  return  to  the  commis- 
sioners, under  oath,  of  the  valuation  of  said  road,  including 
the  bridges  and  culverts.  The  commissioners  are  authorized  to 
purchase  the  road  at  a  price  not  to  exceed  said  appraisal,  or 
may  reject  appraisal  and  have  other  appraisers  appointed  with 
the  same  powers  and  duties.  No  county  under  this  act  can 
purchase  any  turnpike  while  in  debt  for  one  previously  pur- 
chased. 

19.  Bonds  Issued : — The   commissioners  of  any  county, 
in  the  treasury  of  which  there  is  not  sufficient  money  to  pay 
for  such  purchase,  may  issue  the  bonds  of  the  county,  payable 
in  installments,  or  at  intervals  not  exceeding  in  all  a  period 
of  eight  years,  bearing  not  to  exceed  six  per  cent  interest,  and 
such  bonds  and  the  interest  thereon  shall  be  paid  in  such  in- 
stallments as  the  board  shall  deem  best  by  a  special  tax  levied 
for  that  purpose.     (5107-51 10.) 

20.  Same,   Act  of  1883 : — Upon  the  presentation  of  a 
petition  to  the  board  of  commissioners,  praying  for  the  appraise- 
ment, purchase,  repair  and  conversion  of  any  gravel  or  macad- 
amized toll  road  into  a  free  road,  signed  by  stockholders  owning 
or  representing  more  than  one-half  of  the  stock  of  such  toll 
road  company,  fully  describing  the  road  and  showing  that  it  is 
of  public   benefit  and  utility,  the  board  shall  appoint  three 
disinterested  freeholders  as  viewers,  and  a  practical  engineer, 
to  view  and  estimate  the  cash  value  of  such  road,   the  total 
cost  of  putting  the  same  in  good  repair,  and  report  the  same  to 
the  commissioners  with  the  names  of  the  owners  of  all  benefited 
lands  lying  within  one  and  one-half  miles  of  such  road,  stating 
the  number  of  acres  owned  by  each.     If  it  appears  that  said 
petition  is  also  signed  by  persons  owning  a  majority  of  the 
lands  benefited,  the  board  shall  order  the  repair,  purchase  and 
conversion  of  such  road  into  a  free  gravel  road. 

21.  Assessment  of  Benefits : — The  expense  thereof  shall 
be  assessed  against  the  lands  benefited,  by  three  disinterested 


84  INDIANA — CITY    BONDS. 

freeholders,  appointed  by  the  commissioners.  The  board  has 
full  power  to  hear  and  consider  all  objections,  or  to  refer  the 
matter  to  another  set  of  viewers  for  re- appraisal.  The  final 
action  of  the  board  shall  be  entered  in  full  upon  the  records 
thereof,  together  with  the  report  of  the  viewers  confirmed. 
The  assessment  constitutes  a  first  lien  upon  the  property 
assessed. 

22.  Bonds  Issued : — To  meet  the  expenses  .of  such  pur- 
chase and  repair,  the  board  of  county  commissioners  may  issue 
the  bonds  of  the  county,  maturing  at  annual  intervals  after  a 
period   of  two  years,   and  not  extending  beyond  ten  years, 
bearing  interest  at  not  to  exceed  six  per  cent,  payable  semi- 
annually.     Such  bonds  shall  be  sold  at  not  less  than  par,  to 
the  highest  bidder,  after  three  weeks'  publication  in  not  less  than 
two  newspapers  of  general  circulation,  published  in  the  county, 
and  by  posting  notices  at  the  door  of  the  courthouse.     The 
said  assessment  shall  be  divided  into  such  sums  as  shall  be 
sufficient  to  pay  principal  and  interest  of  the  bonds  as  they 
become  due,  and  applied  only  to  their  payment.     (Chap.  128, 
Acts  of  1883,  as  amended  by  Chap.  85,  Acts  of  1885.) 

CITIES  AND  TOWNS. 

23.  Bonds — In  Cities  of  Fifteen   Thousand  and  Over: — 
Any  incorporated  city  containing  a  population  of  fifteen  thou- 
sand   or   over,  may   borrow   money   for  legitimate  corporate 
purposes  to  an  amount  in  the  aggregate  not  exceeding  two  per 
cent  of  the  taxable  property  of  the  city  as  shown  on  the  tax 
duplicate  for  the  year  in  which  such  loan  is  effected.     Before 
the  issue  of  any  such  bonds  is  ordered,  the  city  assessor,  clerk 
and  treasurer  shall  join  in  an  affidavit  stating  the  total  value  of 
the  taxable  property  of  such  city,  as  shown  by  the  tax  duplicate, 
and  also  the  fair  valuation  thereof,  which  affidavit  shall  be  re- 
ported by  the  city  clerk  to  the  council.     Thereupon  the  council 
shall  cause  an  ordinance  to  be  introduced  providing  for  said 
loan,  and  referred  to  a  committee  for  report  at  the  next  regular 
meeting.     Such  ordinance  requires  for  its  passage  a  two-thirds 
vote  of  all  the  members  of  the  council. 

24.  How  Issued : — The  rate  of  interest,  not  exceeding  ten 


INDIANA — CITY    BONDS.  85 

per  cent,  the  manner  and  time  of  payment  of  such  bonds,  not 
exceeding  twenty  years,  and  of  the  interest  thereon,  may  be 
prescribed  by  the  council.  The  bonds  shall  be  signed  by  the 
mayor  and  countersigned  by  the  city  clerk  under  the  corporate 
seal  of  the  city,  and  be  delivered  to  the  city  treasurer,  who 
shall  keep  a  proper  record  thereof. 

25.  Sale  : — The  council,  through  a  committee  appointed 
for  that  purpose,  of  which  committee  the  treasurer  shall  be  a 
member,  may  negotiate  the  sale  of  such  bonds.     They  shall 
sell  the  same  to  the  highest  bidder,  but  at  not  less  than  par, 
after  notice  published  for  such  time  as  they  deem  proper,  in  a 
newspaper  of  general  circulation.     (3116-3119,  in  force  March 
10,  1873.) 

26.  Funding    Bonds — In  Cities  of  over  Sixteen    Thou- 
sand  Voters: — Such  cities  as  had,  at  the  passage  of  an  act, 
February  13,  1877,  an  aggregate  debt  of  two  per  cent  of  their 
taxables,  were  authorized  to  fund  so  much  of  said  indebted- 
ness as  was  outstanding  May  i,  1877,  with  bonds  bearing  not 
more  than  six  per  cent  interest,  payable  semi-annualty,  at  such 
time  and  place  as  the  council  by  ordinance  might  provide. 
When  such  aggregate  debt  amounts  to  or  exceeds  such  two 
per  cent,  any  further  increase  and  any  and  all  evidence  thereof 
shall  be  null  and  void. 

27.  Tax  Limit. — Cities  of  over  sixteen   thousand   are 
prohibited  from  levying  or  assessing  a  tax  for  any  year  in  excess 
of  ninety  cents  on  the  one  hundred  dollars,  and   boards   of 
school  commissioners  of  such  cities  are  limited  to  twenty  cents 
on  the  hundred  dollars,  exclusive  of  the  library  tax  provided 
for  under  Sec.   4460  of  Statutes.     So  much  of   any   law   as 
requires  the  common  council  to  levy  of  a  tax  for  sinking  fund 
is  repealed  as  to  such  cities.     (3120-3122,  in  force  February 

13,  I877-) 

28.  Funding  Bonds: — In  Cities  of  under  Sixteen  Thou- 
sand Voters: — Any  city  or  town  having  a  voting  population  of 
under  sixteen  thousand  voters,  as  shown  by  the  votes  cast  for 
secretary  of  state  at  the  last  preceding  election,   by  a  two- 
thirds  vote  of  the  members  of  the  common  council,  or  board 


86  INDIANA — CITY   BONDS. 

of  trustees,  may  fund  any  outstanding  indebtedness  evidenced 
by  bonds,  notes  or  other  obligations,  heretofore  issued  or 
negotiated,  and  issue  bonds  therefor,  bearing  interest  at  a  rate 
not  to  exceed  six  per  cent,  payable  semi-annually,  in  denomi- 
nations of  not  less  than  fifty  nor  more  than  one  thousand  dol- 
lars, payable  at  any  place  named  therein,  and  at  any  time  not 
later  than  twenty-five  years  from  date. 

29.  Special  Tax : — The  council  or  board  of  trustees  are 
required  to  provide  by  taxation  for  the  payment  of  the  interest 
as  it  accrues  on  said  bonds,  and  also  may  provide  a  sinking 
fund  to  liquidate  the  principal  thereof  at  maturity.     The  inter- 
est coupons  of  said  bonds,  by  order  of  such  council  or  board 
of  trustees,  may,  when  due,  be  receivable  for  any  taxes  levied 
to  pay  such  interest,  and  when  so  ordered  and  expressed  on 
the  face  of  such  coupons,  they  shall  be  receivable  for  any  such 
taxes   thereafter  levied.     (Chap.    13,   Acts  of   1887,  in  force 
February  15,  1887.)' 

30.  Water- works    Bonds  : — The  common   council   of 
any  city  engaged  in  constructing  water-works,  to  supply  such 
city  with  wholesome  water,  may,  by  a  vote  of  two-thirds  thereof, 
at  any  regular  or  adjourned  meeting,  issue  bonds  bearing  not  to 
exceed  ten  per  cent  interest,  to  be  negotiated  at  not  less  than 
ninety-seven  cents  on  the  dollar,  and  the  proceeds  applied  only 
to  the  construction   of   such    water- works.     (3114,    in    force 
March  7,  1873.) 

31.  Same,  in  Certain  Cities  : — The  common  council  of  any 
city  or  board  of  trustees  of   any  incorporated  town  having  a 
population  of  less  than  forty-five  thousand,  which  shall  by 
ordinance  or  resolution   decide  to  erect,  extend,  or  improve 
water-works,  are  authorized  to  issue  the  bonds  of  such  city  or 
town  in  denominations  of  not  less  than  fifty  nor  more  than  one 
thousand  dollars,  payable  at  any  place  designated  therein,  in 
not  less  than  five  nor  more  than  twenty  years  from  date,  with 
interest  payable  annually  or  semi-annually,  and  to  be  sold  at 
not  less  than  ninety-four  cents  on  the  dollar. 

1  This  act  appears  to  repeal  the  former  acts  of  March  3,  1877,  and 
March  7,  1881,  relating  to  the  same  subject.     (3125-3126,  3230-3231.) 


INDIANA — CITY    BONDS — TOWN    LOANS.  87 

32.  Election  : — The  erection  of  said  water-works  must  be 
first  approved  by  a  majority  of  all  the  votes  at  a  general  or 
special  election,  which  may  be  ordered  upon  a  petition  of  one 
hundred  freeholders  and  resident  tax-payers,  and  notice  there- 
of, signed  by  the  clerk,  shall  be  given  by  publication  in  some 
newspaper  printed  and  published  in  such  city  or  town  for  three 
weeks  successively,  before  the  day  of  such  election. 

33.  Tax: — A  tax  of  not  to  exceed  fifty  cents  on  each  one 
hundred  dollars,  and  one  dollar  on  each  poll  shall  be  levied 
each  year  for  the  purpose  of  paying  the  principal  and  interest 
of  such  loans.     (3265-3283,  in  force  March  25,  1879.) 

34.  Any  incorporated  city  is  authorized  to  construct  and 
establish  water-works  and  gas-works,    or  to   become   a   part 
stockholder  in  any  incorporated  company  or  association  author- 
ized by  such  city  to  construct  water- works.     (Sec.  3106,  sub- 
divisions 26  and  28.) 

35.  Aid  to   Roads,  Bridges,  etc.:1 — Any  incorporated 
city,    upon    petition    of    a   majority   of    resident    freeholders 
thereof,  is  authorized  to  borrow  money  to  subscribe  to  the  stock 
of  any  plank  road,   macadamized  road  or  railroad,   hydraulic 
company  or  water  power  running  in  or  through  such  city, 
or  near  the  corporate  limits  thereof,  or  to  any  bridge  company 
to  construct  a  bridge  across  any  river  or  water  course  within  or 
bordering  on  this  state,  where  such  bridge  has  either  terminus 
within  such  city,  or  to  public  improvements  or  public  works, 
but  such  debt  shall  not  be  payable,  either  in  money  or  bonds, 
until  the  completion  of  such  improvements  to  be  aided;  and  the 
council  of  such  city  shall  add  to  the  tax  duplicate  of  each  year 
thereafter  a  levy  sufficient  to  pay  the  annual  interest  on  such 
debt  or  loan,  with  an  addition  of  not  less  than  five  cents  on  the 
one  hundred  dollars,  to  create  a  sinking  fund  for  the  liquidation 
of  the  principal  and  interest  thereof.     (3152-3153.) 

37.  Town  Loans : — No  incorporated  town  shall  have 
power  to  borrow  money  or  incur  any  debt  or  liability  unless  the 
owners  of  five-eights  of  the  taxable  property  of  such  town,  as 

1  Also  see  %  16  and  17  under  "  Counties  "  herein. 


88  INDIANA— TOWNSHIP    DEBTS — SCHOOL   BONDS. 

evidenced  by  the  assessment  roll  of  the  preceding  year,  petition 
the  board  of  trustees  to  contract  such  debt  or  loan.  And  such 
petition  shall  have  attached  thereto  an  affidavit  verifying  the 
genuineness  of  the  signatures  to  the  same.  The  trustees  shall 
add  to  the  tax  duplicate  of  each  year  a  levy  sufficient  to  pay 
the  annual  interest  011  such  debt  or  loan,  with  an  addition  of 
not  less  than  five  cents  on  the  one  hundred  dollars,  to  create  a 
sinking  fund  for  the  payment  of  the  principal.1  (3342. ) 

37.  Township  Debts  : — Whenever  it  becomes  necessary 
for  the  trustee  of  any  township  to  incur  on  behalf  of  the  town- 
ship any  debt  in  excess  of  the  fund  on  hand  to  which  such  debt 
is  chargeable,  and  of  the  tax  for  the  current  year,  the  trustee 
must  first  procure  an  order  from  the  board  of  county  commis- 
sioners authorizing  him  to  incur  such  debt.     Before  the  board 
of  commissioners  can  grant  such  an  order  the  trustee  must  first 
file  a  petition  in  the  county  auditor's  office,  stating  the  object 
for  which  the  debt  is  to  be  contracted,  and  the  amount  required, 
and  make  affidavit  that  notice  has  been  given  of  the  filing  of 
such  petition,  by  posting  notices  in  five  public  places  in  his 
township,  for  at  least  twenty  days  prior  to  the  first  day  of  the 
meeting  of  the  county  board.     (6006-6007.) 

38.  School  Bonds  : — For  the  purchase  of  any  ground, 
and  the  erection  of  building  for  school  purposes,  or  for  the 
payment  of  any  debt  created   by  the  school   trustees   there- 
for, any  city  or  incorporated  town  in  this  state  on  the  filing  by 
the  board  of  trustees  of  such  city  or  town  of  a  report,  under  oath, 
with  the  council  or  board  of  trustees,  showing  the  actual  or  esti- 
mated amount  required  for  such  purpose,  and  on  the  passage  of 
an  ordinance  authorizing  the  same,  may  issue  the  bonds  of  such 
city  or  town. 

39.  Amount — Form — Sale : — The  amount  issued  shall  not 
exceed  in  the  aggregate  fifty  thousand  dollars,  in  denomina- 
tions of  not  less  than  one  hundred  nor  more  than  one  thou- 
sand, and  payable  at  any  place  designated  therein  in  not  less 
than  one  nor  more  than  twenty  years  from  date,  with  interest 

1  This  has  been  repealed  as  to  school  bonds.     44  Ind.,  83. 


INDIANA — RAILROAD   AID    BONDS — PLACE    OF    PAYMENT.      89 

payable  annually  or  semi-annually.     Said  bonds  shall  be  sold 
at  not  less  than  ninety-four  cents  on  the  dollar. 

40.  Tax: — The  common  council  or  board  of  trustees  of 
any  such  incorporated  towns  issuing  such  bonds,  are  required 
to  levy  annually  a  special  tax  sufficient  to  pay  the  interest  and 
principal  as  the  same  becomes  due;  but  such  additional  special 
tax  shall  not  in  any  one  year  exceed  fifty  cents  on  the  one 
hundred  dollars  of  taxable  property  and  one  dollar  on  each 
poll.      (4488.) 

41.  School  Corporations: — Each  civil  township  and  each 
incorporated  town  or  city  is  declared  to  be  a  distinct  municipal 
corporation  for  school  purposes,  by  the  name  and  style  of  the 
civil  township,  town  or  city  corporation.1     (4438.) 

42.  General — Railroad  Aid  Bonds  : — Counties  border- 
ing on  the  state  line,  and  cities  and  townships  therein,  upon  the 
petition  of  a  majority  of  the  resident  freeholders  thereof,    are 
authorized  to  subscribe  to  the  capital  stock  of   any  railroad 
company  to  aid  in  the  construction  of   its  road,  opposite  such 
county  in  any  other  state,  to  form  connection  with  other  rail- 
roads in  such  counties,  and  to  issue  bonds  therefor.2     (4077- 
4092. ) 

43.  Bonds — Place  of  Payment : — It  seems  that  under 
the  Indiana  statute  municipal  bonds  must  be  made  payable  at 

1  This  section  has  been  construed  by  the  supreme  court,  in  connec- 
tion with  section  4437  previously  enacted,  to  the  effect  that  the  legal 
name  of  the  several  school  corporations,  is  the  name  of  the  civil  corpor- 
ation, with  the  word  "school "  prefixed.  That  court  has  also  decided  that 
"  the  township  and  school  township,  the  city  and  school  city,  and  the 
town  and  school  town  are  as  distinct  and  separate  legal  entities,  as  if  they 
existed  in  different  territory  and  had  an  entirely  different  set  of  offi- 
cers. *  *•  *  *  The  two  corporations  are  as  distinct  legal  personages 
as  if  they  had  no  connection  with  each  other.  *  *  *  The  school 
corporation  of  the  several  townships,  towns  and  cities  have  the  same  name 
as  the  civil  corporation  with  the  word  '  school '  prefixed  to  distinguish 
them  from  the  latter.  ' 

Utica  Tp.  v.  Miller,  62  Ind.,  230  (1878). 

City  of  Huntington  v.  Day,  55  Ind.,  7  (1876). 

McLaughlin  v.  Shelby  Tp.,  52  Ind.,  114  (1875). 

Sims  v.  McClure,  52  Ind.,  267  (1875.) 

State  v.  City  of  Terre  Haute,  87  Ind.,  212  (1882). 

3  But  see  the  constitutional  prohibition  as  to  such  subscriptions  by 
counties. 


9O  INDIANA — BONDS — PLACE   OF    PAYMENT. 

some  bank  to  make  them  free  from  equities  in  the  hands  of  a 
bona  fide  holder.  Otherwise  the  municipality  can  make 
the  same  defense  against  such  holder  as  against  the  original 
party.1 

1  Madison  Co.  v.  Brown,  28  Ind.,  161. 


CHAPTER  IX. 


ILLINOIS. 


References  are  to  Hurd^s  Revised  Statutes  of  1887,  except  as  otherwise 

indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Present  Constitution  in  force  August  8,  1870. 

1.  State  Credit : — The  state  shall  never  pay,  assume  or 
become  responsible  for  the  debts  or  liabilities  of,  or  in  any 
manner  give,  loan  or  extend  its  credit  to,  or  in  aid  of  any 
public  or  other  corporation,   association  or  individual.     (Art. 
4,  Sec.  20. ) 

2.  State     Indebtedness  ; — The    state    may,    to    meet 
casual  deficits  or  failures  in  revenues,  contract   debts  not  to 
exceed  in  the  aggregate  two  hundred  and  fifty  thousand  dol- 
lars.    The  general  assembly  is  also  required  to  provide  for  all 
appropriations  necessary  to  meet  the  ordinary  and  contingent 
expenses  of  the  government  until  after  the  adjournment  of  the 
next  regular  session.     No  other  debts,  except  for  the  purpose 
of  repelling  invasion,  suppressing  insurrection,  or  defending 
the  state  in  war,  shall  be  contracted,  unless  the  law  authoriz- 
ing the  same  shall  be  submitted  to  and  approved  by  a  majority 
of  voters  voting  for  members  of  the  general  assembly  at  a  gen- 
eral election,  which  law  must  be  accompanied  by  a  provision 
for  levying  a  tax  for  the  payment  of  the  interest  as  it  accrues. 
A  previous  notice  thereof  shall  be  given  by  publication  for 
three  months  at  least  prior  to  such  election.  (Art.  4,  Sec.  18.) 

3.  Municipal  Subscriptions,  Donations  and  Credits: 
—Neither  the  general  assembly  nor  any  county,  city,  town, 
township,  school  district,  or  other  public  corporation  shall 
ever  make  any  appropriation  or  grant  any  donation  of  land, 

(9') 


92        ILLINOIS — CONSTITUTIONAL   PROVISIONS — COUNTIES. 

money,  or  other  property,  in  aid  or  support  of  any  church  for 
sectarian  purposes,  or  to  any  educational  institution  controlled 
by  any  church  or  sectarian  denomination  whatever.  No 
county,  city,  town,  township  or  other  municipality  shall  ever 
become  a  subscriber  to  the  capital  stock  of  any  railroad  or 
private  corporation,  or  make  donation  to  or  loan  its  credit  in 
aid  of  such  corporation.  This  provision  does  not  affect  sub- 
scriptions which  had  been  authorized  and  voted  for  under 
existing  laws.  (Art.  8,  Sec.  3;  and  amendment  adopted  with 
present  constitution.) 

4.  Municipal  Indebtedness : — No  county,  city,  town- 
ship, school  district  or  other  municipal  corporation  shall  be 
allowed  to  become  indebted  in  any  manner  or  for  any  purpose 
to  an  amount  in  the  aggregate  exceeding  five  per  cent  of  the 
taxable  property  therein,  as  shown  by  the  last  previous  assess- 
ment for  state  and  county  taxes.     Any  municipal  corporation 
incurring  any  such  indebtedness  shall,  before  or  at  the  time  of 
doing  so,  provide  for  the  collection  of  a  direct  annual  tax  suffi- 
cient to  pay  the  interest  on  such  debt  as  it  falls  due,  and  also 
to  pay  the  principal  within  twenty  years.     (Art.  9,  Sec.  12.) 

5.  Special  Legislation  : — The  general  assembly  is  pro- 
hibited from  passing  local  or  special  laws  (among  other  things) 
incorporating  cities,  towns,  or  villages,  or  changing  or  amend- 
ing the  charter  of  any  town,  city  or  village.     (Art.  4,  Sec. 
22.) 

COUNTIES. 

6.  County    Board : — The    corporate    powers    of  each 
county   are  exercised  by  a  county  board.     In  counties  not 
under  township  organization  the  board  consists  of  three  county 
commissioners  elected  for  three  years.     The  county  affairs  of 
Cook  county  are  managed  by  a  board  of  fifteen  commissioners, 
and  in  other  counties  under  township   organization  the  county 
board  is  composed  of  the  town  and  other  supervisors.     Annual 
meetings  of  the  board  of  supervisors  are  held  on  the  second 
Tuesday  of  September,  and  regular  meetings  are  also  held  on 
the  second  Monday  of  July,  of  each  year.     Special  meetings 
are  called  by  the  clerk  on  the  written  request  of  one-third  of  the 


ILLINOIS — COUNTY    BONDS.  93 

members  of  the  board,  by  a  written  notice  sent  to  each  mem- 
ber and  published  in  some  newspaper  in  the  county.  In 
counties  not  under  township  organization  regular  sessions  of 
the  board  are  held  on  the  first  Mondays  of  December,  March, 
June  and  September,  and  the  second  Monday  of  July,  and 
special  sessions  on  the  call  of  the  chairman  or  any  two  mem- 
bers of  the  board.  A  majority  of  the  members,  in  each  case, 
constitutes  a  quorum.  The  county  clerk  is  ex-officio  clerk  of 
the  county  board.  (Const.  Art.  10,  Sees.  5  to  7;  and  Chap. 
34,  Sees.  22  to  63;  Chap.  35,  Sec.  10.) 

7.  Tax  Limit — Additional  Amount  Authorized: — County 
authorities  cannot  assess  taxes,  the  aggregate  of  which  shall 
exceed  seventy-five  cents  on  the  one  hundred  dollars  valuation, 
unless  authorized  by  a  vote  of  the  people.     When  the  county 
board  deem    it  necessary  to  assess  taxes  exceeding  this  limit 
they  may,   by  an  order  entered  of  record  setting  forth  the 
amount  required  and  the  purpose  for  which  the  same  is  desired, 
provide  for  the  submission  of  the  question  to  assess  the  addi- 
tional rate  to  a  vote  of  the  people  at  the  next  election  of  county 
officers,  of  which  submission  the  county  clerk  is  required  to 
give  notice  in  his  election  notice.     A  majority  of  the  votes  cast 
upon  the  question  are  required  to  authorize  the  additional  tax. 
The  question  of  raising  an  additional  tax  may  be  included  in 
a  question  for  issuing  bonds.      (Const.  Art.  9,  Sec.  8;   and 
Chap.  34,  Sees.  27-28. 

8.  County  Bonds  i1 — When  the  county  board  of  any 
county  deem  it  necessary  to  issue  county  bonds  to  enable  them 
to  perform  any  of  the  duties  imposed  upon  them  by  law,  they 
may,  by  an  order  entered  of  record,  specifying  the  amount  of 
bonds  required  and  object  for  which  they  are  to  be  issued, 
submit  to  the  legal  voters  of  their  county  at  any  general  elec- 
tion the  question  of  such  issue.     The  vote  shall  be  by  ballot, 
on  which  shall  be  written  or  printed,    ' '  for  county  bonds' '  or 
"against  county  bonds,"  and  a  majority  of  the  votes  thereon 
is  required  to  authorize  the  issue. 

g.    Amount — Form: — The    amount    of  bonds  so  issued 
1  Also  see  \  25,  et  seq. 


94  ILLINOIS — CITY   AND   VILLAGE    BONDS. 

shall  not  exceed,  including  the  then  existing  indebtedness  of 
the  county,  five  per  cent  of  the  taxable  property  of  the  county. 
The  bonds  shall  be  issued  in  denominations  of  not  less  than 
twenty-five  nor  more  than  one  thousand  dollars  each,  payable 
in  not  less  than  one  nor  more  than  twenty  years,  with  interest 
payable  annually  or  semi-annually,  at  a  rate  of  not  more  than 
eight  per  cent  per  annum.1  (Chap,  34,  Sec.  40.) 
CITIES,  VILLAGES  AND  TOWNS. 

10.  City  and  Village  Bonds : — The    city    council    in 
cities,  and  the  president  and  board  of  trustees  in  villages,  are 
authorized  to  borrow  money  on  the  credit  of  the  corporation 
for   corporate  purposes,   and   issue  bonds    therefor    in    such 
amounts  and  form,  and  on  such  conditions,  as  may  be  prescribed, 
but  in  no  case  must  the  aggregate  indebtedness  exceed  five  per 
cent  of  the  taxable  property  therein.     Before  or  at  the  time  of 
incurring  any  indebtedness,  provision  shall  be  made  for  a  direct 
annual  tax  sufficient  to  pay  the  interest  on  such  debt  as  it  falls 
due,  and  to  discharge  the  principal  thereof  within  twenty  years. 

11.  Refunding  Bonds:2 — Cities  and  villages    through 
their  proper  authorities  are  authorized  to  issue  bonds  in  place 
of  or  to  supply  means  of  meeting  maturing  bonds,  or  for  the 
consolidation  or  funding  of  the  same.    ( Chap.  24,  Art.  5,  Sec.  i. ) 

12.  Water-works: — Cities,  incorporated  towns  and  vil- 
lages in  this  state  are  authorized  to  provide  for  a  supply  of 
water  for  the  purpose  of  fire  protection,  and  for  the  use  of  the 
inhabitants  thereof,  by  the  erection,  construction  and  maintain- 
ing of  a  system  of  water- works,  or  by  uniting  with  any  adjacent 
city,  town,  or  village  therein,  or  by  procuring  such  supply  of 
water,   through   any  adjacent  city,   town,   or  village  having 
water-works.     Contracts  for  the    erection  or  construction  of 
such  works  are  let  to  the  lowest  bidder  upon  not  less  than 
three  weeks'  public  notice  of  the  terms  and  conditions,  given 
by  publication  in  a  newspaper  in  such  city,  town  or  village; 
or  if  there  be  none,  in  one  published  in  the  county. 

1  The  Act  of  1873  authorizing  counties  to  fund  their  war  bounty 
indebtedness,  is  not  deemed  of  sufficient  importance  at  this  date  to  include 
herein.     (Chap.  34,  Sees.  86-90.) 

2  Also  see  \  25  et  seq. 


ILLINOIS — CITY   AND   VILLAGE    BONDS.  95 

13.  Borrowing    Money   for    Water-works: — Such    cities, 
and  incorporated  towns  and  villages  may  borrow  money  and 
levy  and  collect  a  general  tax  for  the  erection,  construction  and 
maintaining  of  such  water-works.     (Chap.  24,  Sees.  226,  227.) 

14.  Record  of  City  Bonds: — The  city  comptroller,  or 
if  there  shall  be  no  such  officer,  the  city  clerk,  is  required  to 
keep  in  his  office  a  book  kept  for  that  purpose  showing  a  cor- 
rect list  of  all  the  outstanding  bonds  of  the  city,  number  and 
amount  of  each,  for  what,  and  to  whom  said  bonds  are  issued; 
and  when  any  city  bonds  are  purchased,  paid  or  cancelled,  a 
record  of  such  fact  shall  be  made  therein.     (Ibid.,  106.) 

15.  Bonds  for  "Water    Supply    Pipe: — Whenever  the 
corporate  authorities  of  any  city,  town  or  village  shall  provide 
by  ordinance  for  the  laying  of  water  supply  pipes,  to  be  paid 
for  by  special  assessment,  as  provided  by  law,  they  may  in 
their  discretion  provide  by  ordinance,  any  time  prior  to  the 
issuance  of  the  warrant  for  assessment  to  the  collector,  that  the 
amount  of  the  assessment  or  cost  of  such  improvement  appor- 
tioned to  the  municipality  as  a  public  benefit,  or  any  part 
thereof,  may  be  paid  for  with  bonds  payable  at  such  time  or 
times  within  twenty  years,  as  may  be  provided  in  the  ordinance. 
(Ibid.,  Sec.  234.) 

16.  Improvement  Districts  in  Cities  and  Villages: — 
The  proper  authorities  of  any  incorporated  city  or  village,  the 
site  of  which  is  wholly  or  partially  subject  to  overflow,  and 
which  site  may  be  surrounded  in  whole  or  in  part  by  levees, 
dikes  or  embankments  to  prevent  such  overflow,  may  lay  off 
such  city  or  village  or  any  part  thereof  into  improvement  dis- 
tricts for  the  purpose  of  draining,  protecting  and  improving 
the  same.     The  cost  of  such  improvement  may  be  provided 
for  by  special  assessment  against  the  property  benefited,  pay- 
able in  installments  or  otherwise. 

17.  Improvement  District  Bonds: — When  the  cost  of  any 
such  improvement  has  been  estimated  and  ascertained  by  a 
competent  engineer,  and  the  benefit  assessed,  such  city  or  vil- 
lage may  cause  a  series  of  bonds  to  be  issued  sufficient  to  pay 


96  ILLINOIS — CITY,    VILLAGE   AND   SCHOOL    BONDS. 

the  special  assessment  or  special  tax  so  ascertained.  The 
bonds  shall  bear  interest  at  a  rate  not  exceeding  six  per  cent, 
and  may  run  for  any  term,  not  exceeding  twenty  years,  as  may 
be  designated  by  ordinance.  Said  bonds  shall  be  a  lien  upon 
the  lots  and  blocks,  or  parts  thereof,  which  shall  be  designated 
therein,  but  before  any  bond  shall  be  issued,  the  owners  of  such 
lots  or  blocks  to  be  charged  .shall  indorse  upon  the  back  of 
.such  bond  his  consent  substantially  as  follows:  "I  hereby 
indorse  the  within  bond,  and  consent  that  the  lot  or  lots,  or 
parts  thereof  therein  designated,  shall  become  liable  for  the 
interest  and  principal  therein  named,  and  the  same  shall  be  a 
lien  upon  said  property  from  this  date  until  paid  off  and  dis- 
charged." Said  bond,  when  executed  by  such  city  or  village, 
and  indorsed  by  such  owner,  shall  be  recorded  in  the  record- 
er's office  of  the  county,  which  record  shall  be  notice  of  the 
lien  created  to  the  same  extent,  as  in  the  case  of  mortgages, 
and  shall  have  the  same  force  and  effect.  No  coupon  shall  be 
recorded. 

18.  Payment  of  Said  Bonds: — It  is  the  duty  of  any  city 
or  village  issuing  such  bonds  to  provide  by  ordinance  for  the 
collection  of  the  interest  and  principal  from  the  property  so 
charged,  but  such  city  or  village  shall  not  be  liable  for  the 
interest  or  principal  thereof  out  of  any  fund  except  the  special 
fund  of  the  improvement  district  to  which  the  bonds  apply,  and 
for  the  faithful  enforcement  of  the  ordinance  providing  for  the 
collection  thereof. 

19.  Rights  of  the  Holder: — The  owner  or  holder  of  any 
such  bond,  may  in  addition  to  the  above  provisions,  have  his 
remedy  in  any  court  upon  the  indorser  thereof,  for  failure  to 
pay  interest  or  principal,  and  in  case  of  two  successive  failures 
by  any  person  liable  to  pay  the  interest  thereof,  such  bonds 
shall  be  held  to  be  due,  and  the  holder  may  enforce  his  lien  for 
interest  and  principal  by  foreclosure  in  any  court  of  competent 
jurisdiction.     (Chap.  24,  Sees.  297  to  304.) 

SCHOOL  BONDS. 

20.  School  Officers  : — Each  congressional  township  is  a 
school  township,  and  is  under  the  management  of  a  board  of 


ILLINOIS — SCHOOL    BONDS.  97 

three  trustees.  Townships  are  divided  by  such  trustees  into 
school  districts,  each  of  which  is  under  the  control  and  man- 
agement of  three  directors.  In  all  school  districts  having  a 
population  of  not  less  than  two  thousand  inhabitants,  and  not 
governed  by  any  special  act  in  relation  to  free  schools,  there  is 
a  board  of  education  consisting  of  six  members,  and  three 
additional  members  for  every  ten  thousand  inhabitants.  Such 
boards  of  education  have  all  the  powers  of  directors  in  school 
districts. 

21.  School  District    Bonds: — When    authorized  by  a 
majority  vote  of  the  people  at  an  election  called  for  that  pur- 
pose, the  directors  of  any  school  district  may  borrow  money 
and  issue  bonds  for  the  purpose  of  building  schoolhouses  or 
purchasing  school  sites,   or  for  repairing  and  improving  the 
same.     Notice  of  such  election  shall  be  given  by  the  directors 
at  least  ten  days  previously,  by  notices  posted  in  at  least  three  of 
the  most  public  places  in  the  district,  specifying  the  place  where 
the  same  is  to  be  held,  the  time  of   opening  and  closing  the 
polls  and  the  questions  to  be  voted  upon.     All  elections  are 
required  to  be  held  on  Saturday,  but  may  be  adjourned  for  one 
week,  if  required  by  the  public  good  in  the  opinion   of  the 
directors  or  a  majority  of  the  voters  so  desiring. 

22.  Amount  of  Bonds — How  Issued: — The   amount   of 
bonds  so  issued  shall  in  no  case  exceed  five  per  cent,  including 
the  existing  indebtedness  of  the  taxable  property  of  the  dis- 
trict, nor  shall  the  tax  levied  in  any  one  year  for  building 
schoolhouses  exceed  three  per  cent  of  such  taxable  property. 
Said  bonds  shall  be  executed  by  the  officers,  or  at  least  two 
members  of  the  board,  in  sums  of  not  less  than  one  hundred 
dollars,  and  bear  interest  at  a  rate  not  to  exceed  eight  per  cent 
per  annum. 

23.  Bonds  Registered: — All  such  bonds  before  being  issued 
shall  be  registered,  numbered  and  countersigned  by  the  school 
treasurer  of  the  township  wherein  the  schoolhouse  of  such  dis- 
trict is  or  is  to  be  located.     Such  registration  shall  be  known  as 
the  "bond  register,"  in  which  shall  be  entered  the  record  of  the 
election   authorizing  the  directors  to  borrow  money,  and  a 


98  ILLINOIS  —  SCHOOL    .VXD    FUNDING   BOND. 

description  of  the  bonds  so  issued,  giving  the  number,  date,  to 
whom  issued,  amount,  rate  of  interest  and  when  due.  The 
exact  amount  received  for  each  and  every  bond  issued  shall 
be  entered  in  the  bond  register,  and  also  the  payment  and  can- 
cellation of  all  such  bonds,  when  the  same  are  paid.  (Chap. 
122,  Sees.  42  and  47.) 

24.  Township  Bonds  for  High  School:—  Upon  petition 
of  fifty  voters  of  any  school  township,  filed  with  the  township 
treasurer,  at  least  fifteen  days  preceding  a  regular  election  of 
trustees,  it  is  made  the  duty  of  said  treasurer  to  submit  to  the 
voters  at  that  election,  the  question  of  establishing  a  high 
school  for  such  township.  If  a  majority  of  the  votes  at  such 
election  shall  be  in  favor  of  the  question,  the  trustees  are 
required  to  establish  such  a  school.  For  the  purpose  of  build- 
ing a  schoolhouse  for  that  purpose,  and  supporting  and  main- 
taining said  school,  the  township  is  regarded  as  a  school  dis- 
trict, and  the  trustees  have  the  power  and  discharge  the  duties 
of  directors  for  such  district,  in  all  respects.  In  like  manner 
the  voters  and  trustees  of  two  or  more  adjoining  townships,  or 
parts  thereof,  may  co-operate  in  the  establishment  and  mainte- 
nance of  a  high  school,  on  such  terms  as  may  be  made  in  writ- 
ing by  the  boards  of  trustees.  These  provisions  evidently 
authorize  the  issue  of  township  bonds  by  trustees,  for  the  pur- 
poses name'd,  in  the  same  manner  as  school  district  bonds  are 
issued"  by  district  directors.  (Chap.  122,  Sec.  35.) 

25.  School  Bonds  in  the  City  of  Chicago  :  —  In  cities 
having  a  population  exceeding  one  hundred  thousand  inhabit- 
ants, the  board  of  education,  with  the  concurrence  of  the  city 
council,  are  authorized  to  issue  bonds  for  the  purpose  of  build- 
ing, furnishing  and  repairing  schoolhouses,  for  purchasing  sites 
for  the  same,  to  provide  for  the  payment  of  said  bonds,  and  to 
borrow  money  for  school  purposes  upon  the  credit  of  the  city. 
(Ibid.,  Sec.  80.) 


26.  Funding  Bonds  :  —  Any  county,  city,  town,  town- 
ship, school  district  or  other  municipal  corporation  having  out- 
standing any  indebtedness  evidenced  by  bonds  or  otherwise,  or 


ILLINOIS — GENERAL    FUNDING    BONDS.  99 

having  contracted  debts  which  are  subsisting  obligations,  is  au- 
thorized to  issue  new  bonds  to  the  holders  of  such  indebtedness, 
or  any  portion  thereof,  or  for  the  purpose  of  obtaining  pro- 
ceeds for  the  payment  of  such  indebtedness.  Such  issue  must 
first  be  authorized  by  a  majority  vote  of  the  legal  voters  of  such 
municipality,  voting  at  some  general  election  or  at  a  special 
election  held  for  that  purpose. 

27.  Election — How  Called : — Any  such  election  may  be 
called  by  the  proper  authorities  on  the  petition  of  ten  legal 
resident  voters  asking  that  the  question  of  issuing  such  bond 
be  submitted  to  the  voters  at  such  election.     Notice  shall  be 
given  by  posting  in  ten  of  the  most  public  places  therein,  and 
by  publishing  the  same  in  the  nearest  newspaper  twenty  days 
previously.     The  notice  shall  state  the  number  and  amount  of 
bonds  proposed  to  be  issued,  the  kind  or  class,  as  hereafter 
specified,  the  amount  of  each,  rate  of  interest,  when  and  where 
payable,  for  what  purpose  issued,  and  when  and  where  the 
election  is  to  be  held. 

28.  How  Issued: — The   bonds  shall  be  issued  in  such 
sums  as  may  be  agreed  upon,   and  shall  run  not  to  exceed 
twenty  years,  and  bear  interest  at  a  rate  not  exceeding  seven 
per  cent,  except  that  bonds  maturing  within  five  years  may 
bear  interest  at  not  to  exceed  eight  per  cent.     All  bonds  so 
issued  shall  show  upon  their  face  that  they  are  issued  under 
this  act,  and  the  purpose  for  which  they  are  issued,  and  shall 
be  of  uniform  design  and  style  throughout  the  state,  to  be  pre- 
scribed by  the  state  auditor. 

29.  Bonds  Classified : — The  bonds  may  be  of  three  differ- 
ent classes,  the  first  class  to  consist  of  bonds  of  which  only  the 
interest  is  payable  annually;  the  second  class  to  consist  of  those 
of  which  the  interest  and  five  per  cent  of  the  principal  are  to 
be  paid  annually;  and  the  third  class  to  consist  of  a  graded 
series,  the  principal  and  interest  of  the  first  grade  being  pay- 
able at  the  end  of  one  year  from  date,  the  second  at  the  end  of 
two  years,  and  thus  to  the  end  of  the  series;  the  class  to  be 
issued  to  be  at  the  option  of  the  legal  voters  voting  thereon. 

30.  Bonds   -by   Whom,  Executed: — Said  bonds,  when  is- 


100  ILLINOIS — GENERAL,   FUNDING    BONDS. 

sued  in  behalf  of  counties  under  township  organization,  shall 
be  executed  by  the  chairman  of  the  board  of  supervisors,  and 
the  clerk  of  the  county  court  attesting  the  same  with  his  sig- 
nature and  official  seal;  in  counties  not  under  township  organi- 
zation, by  the  acting  chairman  of  the  county  commissioners 
and  said  clerk  of  the  county  court;  when  issued  in  behalf  of 
cities,  by  the  mayor  and  city  clerk  with  the  city  seal  attached; 
in  behalf  of  towns  organized  under  the  township  organization 
law,  by  the  supervisor  or  supervisors  thereof  and  the  town 
clerk;  and  when  issued  in  behalf  of  other  municipalities,  by  the 
president,  treasurer,  or  chief  executive  officer,  together  with  the 
clerk  or  secretary  thereof. 

31.  Valuation  of  Taxable  Property  Indorsed  on  Bonds  : — 
It  is  the  duty  of  the  county  clerk  of  the  county,  or  other  proper 
officer  of  the  municipality  to  whom  the  assessment  rolls  for 
state  taxes  are  returnable,  within  five  days  after  the  total  value 
of  the  property  subject  to  taxation  therein  shall  be  returned  to 
him,  to  make  out  and  transmit  to  the  state  auditor,  to  be  filed 
in  his  office,  a  certificate  showing  the  total  value  of  all  the  tax- 
able property  of  such  municipality.     It  is  the  duty  of  the 
auditor  to  place  on  the  back  of   all  of  said  bonds  or  other 
evidences  of    indebtedness,  a  certificate   showing   the  aggre- 
gate amount  of  the  taxable  property  of  the  municipal  corpora- 
tion issuing  the  same,  setting  forth  separately  the  value  of  the 
real  estate  and  personal  property.     In  case  no  such  return  has 
been  made  to  the  auditor,  his  certificate  shall  be  based  on  the 
affidavit  made  by  the  officers  of   the  corporation  issuing  the 
bonds.     (See  Sec.  33. ) 

32.  Amount  of  Bonds — Sale : — The  new  bonds  or  other 
evidences  of  indebtedness  issued  under  this  act  shall  not  be  for 
a  greater  sum  in  the  aggregate  than  the  principal  and  accrued 
or  earned  interest  unpaid  of  such  outstanding  bonds  or  indebt- 
edness.    It  is  made  the  duty  of  the  state  auditor,  on  the  request 
of  the  corporate  authorities  issuing  them,  and  at  the  expense 
of  such  corporation,  to  negotiate  such  bonds  at  not  less  than 
par  and  on  the  best  terms  which  can  be  obtained;  or  any  such 
municipality  may,  through  its  corporate  authorities,  so  nego- 


ILLINOIS — GENERAL    FUNDING    BONDS.  IOI 

tiate  and  sell  said  bonds  without  the  intervention  of  the  auditor. 

33.  Registry  of  Bonds  : — All  bonds  or  other  evidences  of 
indebtedness  so  issued  shall  be  registered  by  the  clerk  or  other 
proper  municipal  officers  having  the  custody  of  its  records,  in 
a  book  kept  for  that  purpose,  showing  the  date,  amount,  num- 
ber, class,  date  of  maturity,  rate  of  interest,  place  of  payment, 
and  a  description  of  the  bond  or  indebtedness  for  which,  or  for 
the  payment  of  which,  the  same  was  given,  as  nearly  as  prac- 
ticable.    On  presentation  to  the  state  auditor  he  shall  also 
register  said  bonds  in  his  office,  showing  the  same  facts  and 
also  when  and  where  principal  and  interest  are  payable,  under 
what  act,  and  by  what  authority,  for  what  purpose,   and  by 
what   municipal   corporation   the   same  were  issued,  and  the 
name  of  the  person  presenting  the  same  for  registry.     The 
auditor  shall  also  certify  under  the  seal  of  his  office  upon  each 
bond  the  fact  of  such  registry. 

34.  Preliminary    Certificate  Required : — No   such    bonds 
shall  be  entitled  to  registry  until  a  sworn  certificate  shall  have 
been  filed  with  the  auditor  showing  that  all  the  requirements 
of  this  act  have  been  fully  complied  with  in  their  issue.     In 
the  case  of  county  bonds  this  affidavit  shall  be  made  by  the 
chairman  of  the  county  board,  in  the  case  of  township  bonds 
by  the  supervisor,  in  the  case  of  city  bonds  by  the  mayor,  in 
the  case  of  town  or  village  bonds  by  the  chairman  of  the  town 
or  village  board,  and  in  case  of  school  district  bonds  by  each 
of  the  directors.     The  certificate  shall  set  forth  the  date  of  the 
election  at  which  the  issue  was  authorized,  and  shall  state  the 
class,  date,    number,    amount,  rate  of  interest,    and  date  of 
maturity  of  bonds,  the  aggregate  equalized  value  of  real  prop- 
erty and  of  the  personal  property  assessed  in  such  locality  for 
the  previous  year,  together  with  any  other  information  relating 
thereto  required  by  the  auditor. 

35.  Auditor  to  Certify  Tax  Rate : — When  bonds  or  other 
evidences  of  indebtedness  have  been  so  registered,   the  state 
auditor  shall  annually  ascertain  the  amount  of  principal  and 
interest  due,  or  to  become  due,  for  the  current  year  thereon, 
and  upon  the  basis  of  such  certificate  of  valuation  he  shall 


IO2  ILLINOIS FUNDING    BONDS. 

ascertain  and  certify  to  the  county  clerk  of  the  county,  or  other 
proper  officer,  wherein  the  same  is  to  be  raised,  the  rate  of  tax 
required  to  meet  the  payment  of  the  amount  so  due,  and  the 
rate  certified  shall  thereupon  be  deemed  added  to  and  a  part 
of  the  per  cent  which  is  or  may  be  levied  or  provided  for  the 
purpose  of  state  revenue,  and  shall  be  so  treated  by  such  clerk 
or  other  officer. 

36.  Application  of  Tax  Collected : — The  amount  of  such 
tax  collected  for  such  purpose  shall  be  transmitted  to  the  state 
treasurer  together  with  other  state  taxes,  except  that  it  shall 
be  legal  for  the  county  collector  to  pay  therefrom  any  such 
bonds  or  interest  coupons  presented  to  him  before  such  money 
is  transmitted.     Upon  receipt  of  the  funds  so  collected  by  the 
state,  they  shall  be  held  in  trust  for  and  applied  to  the  payment 
of  said  bonds  or  other  evidences  of  indebtedness. 

37.  Default  in  Payment : — In  case  of  the  default  in  the 
payment  of  any  such  registered  bond,  the  holder  thereof  may 
cause  the  same  to  be  registered  in  the  office  of  the  state  auditor 
as  a  matured  or  unsatisfied  bond,  and  thereupon  for  the  pur- 
pose of  providing  for  the  payment  of  the  principal,  at  the  rate 
of  five  per  cent  thereof  annually,  and  of  the  interest  in  arrears, 
the  same  proceeding  shall  be  had  as  provided  above,  by  the 
collection  of  an  annual  tax  for  said  purposes  from  year  to  year 
until  the  full  satisfaction  of  such  indebtedness.     (Chap.  113. 
Sees,  i  to  n,  as  amended  in  1879.) 

38.  Funding  Bonds — Act  of  1872  :' — The  proper  author- 
ities of  any  county,   city,  town,  township,   school  district  or 
other  municipal  corporation  which  has  issued  bonds  or  other 
evidences  of  indebtedness  on  account  of  any  subscription  to 
the  capital  stock  of  any  railroad  company,  in  aid  of  any  public 
buildings  or  other  public  improvements,  or  for  any  other  pur- 
pose, which  are  now  outstanding  legal  obligations  against  such 
municipalities,  may,  upon  the  surrender  thereof,  issue  in  the 
place  of  such  outstanding  bond  or  other  indebtedness  to  the 

1  We  omit  from  this  digest  an  act  "  to  fund  and  provide  for  paying 
the  railroad  debts  of  counties,  townships,  cities  and  towns."  In  force 
April  16,  1869,  and  appearing  as  Sees,  n  to  24,  Chap.  113. 


ILLINOIS— FUNDING    BONDS — SINKING    FUND.  103 

holders  or  the  owners  of  the  same,  new  bonds  or  other  evi- 
dences of  indebtedness,  in  such  form,  for  such  amount,  upon 
such  time,  not  exceeding  twenty  years,  and  drawing  such  rate 
of  interest,  not  exceeding  ten  per  cent,  as  may  be  agreed  upon 
with  such  holders  and  owners.  Said  bonds  shall  show  on  their 
face  that  they  are  issued  under  this  act. 

39.  Must  be  Authorized — Limit : — The  issue  of  said  new 
bonds  must  first  be  authorized  by  a  majority  vote  of  the  legal 
voters  of   the  municipality  voting  either  at  some  annual  or 
special  election  therein.     The}^  must  not  be  issued  to  an  amount 
so  as  to  increase  the  aggregate  indebtedness  of  the  municipal 
corporation   beyond   five   per   cent   of    the   taxable    property 
therein.     (Ibid.,  Sec.  27,  in  force  March  26,  1872,  as  amended 
by  act  in  force  July  i,  1875.) 

40.  Sinking  Fund  for  Local  Indebtedness  : — In  any 
county,   township,  city,   town  or  school  district  having  out- 
standing  bonds  registered  in  the  office  of  the  state  auditor,  the 
board  of  supervisors,  or  board  of  county  commissioners,  town 
auditors,  city  council,  town  trustees,  or  school  directors,  as  the 
case  may  be,  may,  by  resolution  spread  upon  their  records  and 
certified  to  the  auditor,  request  said  auditor  to  create  a  sinking 
fund  to  provide  for  the  payment  of  such  outstanding  bonded 
debt,  or  any  part  thereof,  as  it  may  become  due.     The  resolu- 
tion shall  specify  the  number,  amount  to  be  provided  for,  the 
time  when  the  same  shall  become  due,  and  the  amount  desired 
to  be  raised  annually  to  meet  the  same. 

41.  Aiiditor  to  Certify  Rate — Fund  Invested : — The  audi- 
tor shall  file  such  resolution  in  his  office,  and  thereafter  it  shall 
be  his  duty  in  certifying  the  amount  of  taxes  to  be  raised 
within  said  district,  to  fix  and  certify  a  rate,  to  be  denominated 
"Sinking    Fund    Tax,"    sufficient   to   produce   the   required 
amount,  to  be  levied  and  collected  as  other  state  taxes.     The 
state  treasurer  shall  invest  the  said  taxes  in  government  bonds 
or  in  the  bonds  of  the  municipality  to  which   such    fund 
belongs  and  for  which  it  is  created,  at  the  lowest  price  at  which 
they  can  be  purchased,  not  exceeding  par  and  accrued  interest, 
and  the  proper  officers  of  such  municipality  shall  have  the 


104     ILUNOIS — SINKING    FUND — ROAD    AND    BRIDGE    BONDS. 

right  to  determine  the  kind  of  bonds  they  will  authorize  to  be 
purchased,  and  to  fix  the  maximum  price  to  be  paid.  Any 
surplus  remaining  after  the  payment  of  the  indebtedness  for 
which  the  same  was  collected  shall  be  returned  to  the  proper 
municipality  upon  legal  request.  (Ibid. ,  Sec.  34-44.) 

42.  Bonds  for  Roads  and  Bridges  : — In  counties  under 
township  organization  the  commissioners  of   highways  have 
charge  of  roads  and  bridges.     When  such  commissioners  desire 
to  expend  on  any  bridge  or  other  distinct  and  expensive  work 
on  a  road,  a  greater  sum  of  money  than  is   available  to  them 
by  other  means,  they  may  petition  the  town  supervisors  to  call  a 
special  town  meeting  and  vote  upon  the  proposition,  wrhich  shall 
be  clearly  stated  in  the  petition.     This  petition  shall  be  signed 
by  the  commissioners,  officially,  and  by  at  least  twenty-five  free- 
holders  of  the  town,   and  filed  in  the  office  of  town  clerk. 
Thereupon  the  town  clerk,  upon  the  written  order  of  the  super- 
visors, shall  post  up  in  ten  of  the  most  public  places  in  such 
town,  notices  of   a  special  town  meeting,  stating  the  object, 
time,  place  (being  that  of  the  last  town  meeting),  maximum 
sum  to  be  borrowed,  and  the  manner  of  voting,  which  shall  be 
by  ballot. 

43.  How  Issiied: — If    a    majority   of    the    legal    voters 
voting  at  such  election   shall  be  in    favor   of  the   submitted 
proposition,  the  supervisors  and  town  clerk,  acting  under  the 
direction  of  the  commissioners,  shall  issue  from  time  to  time  as 
the  work  progresses,  a  sufficient  amount  in  the  aggregate  of 
the  bonds  of  such  town  for  said  purpose.     The  bonds  may  be 
of  such  denomination,  bear  such  rate  of  interest,  not  exceeding 
six  per  cent,  upon  such  time,  and  be  disposed  of  at  not  less 
than  par,  as  the  necessities  and  conveniences  of  the  said  town 
officers  require.     (Chap.  121,  Sec.  20.) 

44.  Bonds    for   Bridges  Over    Division  Streams  : — 
Bridges   over  streams  which   divide   towns  or  counties,   and 
bridges  over  streams  on  roads,  or  county  or  town  lines,  shall 
be  built  and  repaired  at  the  expense  of  such  towns  or  counties. 
Whenever  the  commissioners  of  either  such  adjoining  towns 
refuse  to  enter  into  such  joint  contracts  to  build  and  maintain 


ILLINOIS — BRIDGE    BONDS — DRAINAGE    BONDS.  105 

any  such  bridge,  the  commissioners  of  the  other  town  ma}7 
submit  to  a  special  town  meeting  a  proposition  whether  such 
town  shall  build  and  maintain  such  bridge  at  its  own  expense, 
and  if  the  proposed  bridge  require  a  greater  sum  of  money 
than  is  available  to  the  commissioners,  they  may  also  submit 
the  question  of  borrowing  money  for  the  purpose.  The  elec- 
tion shall  be  held  and  bonds  issued  substantially  in  the  same 
manner  as  provided  in  the  two  previous  sections,  except  that  the 
bonds  may  bear  interest  at  a  rate  not  exceeding  eight  per  cent. 
In  both  cases  the  town  is  required  to  provide  for  the  payment 
of  the  bonds  and  interest  by  appropriate  taxation.  (Ibid., 
Sees.  21  to  23.) 

45.  Same,   in  Counties  Under  Township  Organization: — 
Whenever  the  commissioners  of  adjoining  districts,  as  above, 
refuse  to  enter  into  a  joint  contract  to  build  and  maintain  such 
a  bridge,  the  commissioners  of  the  other  district  may  submit 
to  the  legal  voters  thereof,  at  any  annual  or  special  election, 
the  question  of  building  such  bridge  at  its  own  expense,  and 
also,  if  required,  of  borrowing  money  to  construct  the  same. 
The  annual  election  is  held  on  the  first  Tuesday  in   March. 
Notice  of  the  time  and  place  of  holding  any  annual  or  special 
election  is  given  by  the  district  clerk,  or  in  his  absence,  by  the 
commissioners,  by  posting  written  or  printed  notices,  in  at  least 
three  of  the  most  public  places  in  the  district  at  least  fifteen 
days  previously. 

46.  Bonds  Issued: — If  the  issue  of  the  bonds  is  author- 
ized by  a  majority  vote,  at  a  meeting  so  called,  the  commis- 
sioners are  authorized,  from  time  to  time  as  the  work  pro- 
gresses, for  the  purpose  of  building  such  bridge,  to  issue  bonds, 
to  be  countersigned  by  the  district  clerk  of  such  town,  bear 
such  rate  of  interest,  not  exceeding  eight  per  cent,  upon  such 
time,  and  to  be  disposed  of  at  not  less  than  par,  as  may  be 
required.     (Ibid.,  150  to  151;  196.) 

DRAINAGE  DISTRICT  BONDS. 

47.  Drainage    Districts — Assessments: — The    drainage 
laws  of  Illinois  are  unusually  lengthy  and  elaborate  in  their 
provisions.     They  provide  for  the  organizing  and  setting  apart 


106  ILLINOIS — DRAINAGE    BONDS. 

of  drainage  districts  for  the  purpose  of  draining  and  reclaim- 
ing lands  therein.  Under  the  act  of  1879,  drainage  districts 
may  be  organized  by  the  county  court  upon  petition  of  a  major- 
ity of  the  owners,  representing  one-third  in  area  of  the  lands 
to  be  reclaimed  or  benefited.  Three  drainage  commissioners 
are  appointed  to  superintend  the  proposed  work  or  improve- 
ment. The  cost  of  the  work  is  assessed  against  the  lands 
benefited,  and  the  county  court  has  full  power  as  to  all  matters 
connected  with  the  organization  of  such  district  or  the  making 
of  such  assessment,  and  may  order  the  assessments  paid  in 
installments,  which  shall  draw  interest  at  the  rate  of  six  per 
cent  per  annum  from  the  date  of  confirmation  until  paid. 

48.  Bonds  May  be  Issued : — Said  commissioners  are  au- 
thorized to  borrow  money,  not  exceeding  ninety  per  cent  of  the 
amount  of  the  unpaid  assessment,  for  the  construction   of  any 
such  work,  or  for  the  payment  of   any  indebtedness  incurred 
therefor,  and  issue  notes  or  bonds  bearing  interest  at  a  rate  not 
to  exceed  six  per  cent,  and  not  running  beyond  one  year  after 
the  last  installment  of  assessment  on  account  of  which  the  loan 
was  made  shall  fall  due,  or  bonds  may  be  issued  to  the  amount 
of  ninety  per  cent  of  any  one  installment,  payable  in  one  year 
after  the  same  falls  due.     The  bonds  constitute  a  lien  upon  the 
assessment  against  which  the  same  were  issued. 

49.  Funding   Such  Indebtedness : — When  authorized  by 
the  county  court,  the  commissioners  may  refund  any  outstand- 
ing notes  and  bonds  issued  for  the  above  purposes  with  new 
notes  or  bonds,  payable  as  the  commissioners  may  determine,  not 
later  than  one  year  after  the  last  postponed  installment  matures, 
and  not  to  exceed  in  the  aggregate  the  amount  refunded.     The 
court  also  has  the  power,  on  the  petition  of  the  commissioners, 
to  order  that  the  collection  of  any  one  or  more  of  the  assess- 
ment installments  be  postponed  for  such  time  as  the  court  may 
determine,  the  postponed  installments,  unless  otherwise  ordered, 
to  bear  eight  per  cent  interest. 

50.  Bonds — How  Executed: — Each   bond   issued   under 
any  of  the  above  provisions  shall  be  attested  by  the  clerk  of 
the  county  court,  who  shall  also  make  a  certified  statement 


ILLINOIS — DRAINAGE    BONDS.  IOJ 

thereon  of  the  total  amount  of  assessments  and  rate  of  interest 
thereon,  pledged  for  the  payment  of  said  bonds,  the  date, 
number,  denomination  and  time  due  of  all  bonds  issued,  which 
are  a  lien  upon  the  assessments  or  installments  of  assessments 
of  the  district;  when  the  assessments  were  confirmed  by  the 
county  court,  and  the  number  of  acres  of  land  in  the  district 
against  which  said  assessments  were  made.  (Chap.  42,  Sees. 
1-74,  Act  of  1879,  amended  1885.) 

51.  Special  Drainage  Districts — Bonds  : — When  the 
proposed  work  lies  in  three  or  more  towns  in  the  same  or  differ- 
ent counties,  the  county  court,  upon  petition  of  a  majority  in 
number  of  the  adult  owners,  representing  more  than  one-third 
of  the  lands  lying  in  the  proposed  district,  or  of  not  less  than 
one-third  of  such  owners,  who  represent  a  major  part  of  such 
land,   may   organize  what   is   known   as    "Special    Drainage 
Districts."      Three   drainage   commissioners   elected  for  such 
district,  or  in  districts  containing  less  than  fifteen  land  owners, 
appointed  by  the  county  court,  have  charge  of   the  proposed 
improvements  in  the  district.    They  shall  assess  the  costs  thereof 
against  the  land  benefited,  and  may  provide  that  the  assessment 
be  paid  in  installments.     The  commissioners  may  postpone  the 
payment  of  the  assessment  or  any  installment,  but  not  longer 
than  fifteen  years  from  such  levy.     Money  may  be  borrowed 
and  bonds  issued  substantially  as  provided  above.     (See  Sees. 
48-50.) 

52.  Funding  Bonds  and  Indebtedness  : — The  commission- 
ers of  any  special  drainage  district  may  fund  any  maturing 
bonds  or  notes  with  new  bonds  and  notes,  to  the  amount  of  any 
unpaid  assessments  upon  which  such  outstanding  notes  or  bonds 
may  have  been  issued.     The  new  notes  or  bonds  shall  bear  not 
to  exceed  seven  per  cent  interest,  and  run  not  to  exceed  one 
year  beyond  the  time  fixed  for  the  payment  of  the  last  install- 
ment of  such   assessment.     Upon   a  petition  of  a  majority  in 
number  of  the  adult  owners  representing  at  least  one-third  of 
the  lands  assessed,  the  commissioners  may  extend  the  time  of 
payment  of  any  unpaid  assessment  for  not  to  exceed  ten  years 
from  the  time  the  same  was  confirmed.     Bonds  of  the  district 


IO8  ILLINOIS — DRAINAGE    BONDS. 

may  be  issued  to  the  amount  thus  extended,  bear  interest  at 
not  to  exceed  seven  per  cent,  and  run  not  longer  than  one  year 
beyond  the  time  such  extended  assessments  fall  due. 

'  53-  Registration  by  State  Auditor : — On  presentation,  the 
state  auditor  is  required  to  register  all  bonds  so  issued,  in  his 
office,  showing  the  number,  date,  amount,  date  of  maturity, 
rate  of  interest,  and  when  payable,  place  of  payment,  under 
what  act  and  by  what  district  issued,  and  the  name  of  the  per- 
son presenting  the  same  for  registration.  He  shall  also  certify 
upon  each  bond  the  fact  of  such  registration,  but  no  bonds  shall 
be  entitled  to  such  registry,  until  a  sworn  statement  by  the 
corporate  authorities  of  the  district  issuing  the  same  shall  have 
been  filed  with  him,  showing  the  date  of  the  organization  of 
the  district,  in  what  county  organized,  the  time  when  the 
assessment,  on  account  of  which  the  bonds  were  issued,  will 
become  due,  and  the  date,  number,  amount,  rate  of  interest, 
and  the  date  of  maturity  of  the  bonds,  with  any  other  infor- 
mation relating  thereto  required  by  the  auditor.  The  district 
authorities  are  also  required  to  keep  a  full  record  of  such  bonds. 

54.  Auditor  to  Certify  for   7 ax  Levy : — It  is  made  the 
duty   of  the  auditor  to  ascertain  and  certify  to  the  proper 
county  clerk  for  levy  and  collection  on  the  amount  required  for 
the  payment  of  any  interest  or  principal  due  on  bonds  so  reg- 
istered.    The   amount  so  collected  shall  be  returned  to  the 
state  auditor  with  other  state  taxes,  and  applied  to  the  pay- 
ment of  the  bonds  and  interest  for  which  the  same  was  levied. 
In  case  of  non-registered  bonds,  it  is  the  duty  of  the  commis- 
sioners to  certify  the  required  amount  to  the  county  clerk. 

55.  Lien  of  Assessments : — All  assessments  so  made  for 
the  improvement  of  such  drainage  districts  are  a  lien  upon  the 
land  assessed,  but  such  lands  shall  not  be  liable  for  more  than 
its  proportionate  share.     In  case  of  non-payment  of  any  assess- 
ment or  tax  levy,  the  drainage  commissioners  may  foreclose  the 
lien  in  chancery,  or  maintain  a  suit  at  law  against  the  person 
liable.1     (Ibid.,  Sees.  124-147.     In  force  July  i,  1885.) 

1  For  fuller  details  of  the  foregoing  drainage  laws  and  other  provisions 
relating  to  the  organization  of  drainage  districts,  the  levying  and  collec- 
tion of  assessments,  etc.,  reference  is  made  to  Chap.  42  of  Statutes. 


ILLINOIS — PARK  BONDS.  IOQ 

BONDS  FOR  PARKS. 

56.  Note : — A  number  of  acts  authorizing  or  relating  to 
the  issue  of  bonds  for  public  park  purpose,  applicable  espe- 
cially to  the  Chicago  parks,  are  omitted  here.  They  may  be 
found  as  Chapter  105  of  the  Revised  Statutes,  with  its  various 
amendments. 


CHAPTER  X. 


MICHIGAN. 


References  are  to  the  Sections  in  the  Revised  Statutes  of 1882,  except  as 
otherwise  indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  in  Jorce  January  ist,  1851. 

1.  State  Indebtedness  : — To  meet  deficits  in  the  rev- 
enue, the  state  may  contract  debts  in  the  aggregate  at  no  one 
time  exceeding  fifty  thousand  dollars.     (Art.  4,  Sec.  3.) 

2.  State  Credit: — The  credit  of  the  state  shall  not  be 
loaned  to,  or  in  aid  of,  any  person,  association,  or  corporation, 
nor  shall  the  state  subscribe  to  or  be  interested  in  the  stock  of 
any  company,  association  or  corporation,  or  be  interested  in  any 
work  of  internal  improvement.     (Art.  14,  Sees.  6,  8  and  9.) 

3.  County    Indebtedness: — A    board    of   supervisors, 
consisting  of  one  from  each  organized  township,  is  established 
in  each  county.     Such  board  may  borrow,  or  raise  by  tax,  one 
thousand  dollars  for  constructing  or  repairing  public  buildings, 
highways  or  bridges,  but  no  greater  sum,  unless  authorized  by 
a  majority  of  the  electors  of  such  county  voting  thereon.    (Art. 
10,  Sees.  6  and  9.) 

4.  Cities  and  Villages  : — The  legislature  shall  provide 
for  the  incorporation  and  organization  of  cities  and  villages, 
and  shall  restrict  their  powers  of  taxation,  borrowing  money, 
contracting  debts,  and  loaning  their  credit.   (Art.  15,  Sec.  13,) 

COUNTIES. 

5.  County  Board  : — Counties  in  this  state  are  managed 
by  a  board  of  supervisors  consisting  of  one  from  each  organized 
township,  and  also  such  representatives  from  cities   as  may  be 
by  law  provided.     Annual  meetings  are  held  on  the  second 

(no) 


MICHIGAN — COUNTY    LOANS — CITIES.  Ill 

Monday  of  October.  Special  meetings,  when  necessary,  may 
be  called  by  the  county  clerk  on  the  written  request  of  at  least 
one-third  of  the  board,  by  giving  a  written  notice  to  each 
supervisor  personally,  or  leaving  the  same  at  his  residence,  at 
least  six  days  before  such  meeting.  The  county  clerk  is  ex- 
officio  clerk  of  the  board  of  supervisors.  (473  to  482.) 

6.  Borrowing  Money  : — The  board  of  supervisors  may 
borrow,  or  raise  by  tax,  any  sum  which  may  be  necessary  for 
the  purchase  of,  or  to  provide  real  estate  and  buildings  for  the 
care  of  the  poor,  for  courthouses,  jails  and  other  county  build- 
ings, or  which  may  be  necessary  for  the  construction  of  bridges 
or  highways. 

7.  Limit — Time — Tax: — No  greater  sum  than  one  thou- 
sand dollars  shall  be  borrowed  or  raised  by  tax  in  any  one  year 
for  the  purpose  of  constructing  or  repairing  public  buildings, 
highways  or  bridges,  unless  authorized  by  a  majority  of  the 
electors  of  such  county  voting  therefor.     It  is  the  duty  of  the 
board  to  provide  by  taxation  for  the  payment,  within  fifteen 
years,  of  any  loan  made  by  them.     (483.) 

8.  Submission    of  Question    to    Borrow   Money: — When- 
ever it  shall  be  necessary  to  submit  to  a  vote  of  the  electors  of 
any  county,  the  question  of  raising  any  sum  of  money  by  loan 
or  tax,  the  board  of  supervisors  shall  determine  the  amount 
required  and  give  notice  of  such  submission,  to  be  made  at  the 
annual  meeting,  by  publishing  a  notice  in  a  newspaper  in  such 
county,  and  posting  copies  of  such  notice,  which  shall  con- 
tain  the  time  and  place  of  the  election,   in   at  least  three 
public  places  in  each  township,  and  in  each  ward  of  any  city 
in  the  county,  for  thirty  days  previously.     In  case  no  news- 
paper is  published  in  the  county,  publication  of  the  notice 
must  be  made  in  the  nearest  paper  for  three  weeks  prior  to  such 
election.     A  majority  vote  is  required  to  authorize  the  loan. 
(490  to  492.) 

CITIES,  VILLAGES  AND  TOWNSHIPS. 
9     City   Buildings,  etc.: — Any  city,  through  its  common 
council,  is  authorized  to  erect  or  purchase  all  necessary  build- 


112  MICHIGAN — CITY    LOANS. 

ings  for  the  use  of  such  city,  and  to  purchase  such  real  estate 
as  shall  be  necessary  for  public  grounds,  markets,  parks  ceme- 
teries, prisons,  hospitals,  or  for  the  construction  of  water- 
works. (2600—2602.) 

10.  Tax  Limit: — The  amount  ot  taxes  for  general  pur- 
poses which  may  be  levied  by  the  city  council,  is  limited  in 
cities  of  more  than  six  thousand  population,  to  one  and  one- 
fourth  per  cent  of  the  taxable  property  of  such  city  for  any 
one  year;  in  cities  of  over  six  thousand  and  not  more 
than  nine  thousand,  one  and  one-half  per  cent;  in  cities 
of  more  than  nine  thousand  and  not  exceeding  fourteen 
thousand,  one  and  three-fourths  per  cent;  and  in  cities  of  more 
than  fourteen  thousand,  two  per  cent.  This  limitation  is  exclu- 
sive of  taxes  levied  for  school  purposes,  and  the  council  may 
raise  an  additional  three  mills  to  provide  for  a  sinking  fund  to 
pay  the  funded  debt  of  the  city,  and  also  in  any  street  improve- 
ment district,  a  tax  of  not  to  exceed  one- fourth  per  cent  for  the 
care  of  streets.  No  public  work  or  improvement  shall  be 
commenced  until  a  tax  or  assessment  to  pay  its  cost  shall  have 
been  levied,  or  ordered  levied.  No  tax  or  assessment  can  be 
levied  by  the  council  of  any  city  unless  by  a  concurring  vote 
of  two-thirds  of  all  the  aldermen  elected,  and  no  resolution  or 
appropriation  passed  except  by  a  vote  of  the  majority  of  such 
elected  aldermen,  except  as  otherwise  specially  provided. 
(2515;  2697  to  2698.) 

11.  Loans   to  Anticipate    Special   Assessments: — In 
addition  to  taxes  above  provided  for,  the  council  of  any  city 
may  raise  by  special  assessments  in  any  sewer  district,  or  in  any 
special  assessment  district,  for  local  improvements  of  a  public 
nature,  any  sum  necessary,  not  to  exceed  five  per  cent  of  the 
property  of  such  district,  and  in  anticipation  of  the  collection 
of  any  such  special  assessment,  may  borrow  money  to  defray 
the  cost  of  any  improvement  for  which  such  assessment  has 
been  levied,  such  loan  not  to  exceed  the  amount  of  the  as- 
sessment.    (2699,  2711.) 

12.  Loans  for  Public  Improvements  : — If,  for  the  pur- 
pose of  providing  public  buildings  or  grounds  or  for  other  public 


MICHIGAN — CITY    AND    VILLAGE    LOANS.  113 

improvements  or  works,  a  greater  sum  is  required  than  the 
council  is  authorized  to  raise  by  taxation,  such  amount  may  be 
raised  by  tax  or  loan,  when  authorized  by  a  majority  vote  of 
the  electors  of  such  city  at  an  annual  city  election.  The  ques- 
tion shall  be  submitted  by  an  ordinance  or  resolution,  stating 
the  amount  required,  and  whether  by  tax  or  loan,  published  in 
some  newspaper  in  such  city  and  posted  in  five  of  the  most 
public  places  in  each  ward,  for  at  least  two  weeks  previous  to 
such  election. 

13.  Amount — Record : — For  any  loan  thus  authorized  the 
common  council  of  the  city  may  issue  bonds  bearing  any  legal 
rate  of  interest,  but  the  amount  so  raised  shall  not  exceed  in 
any  one  year  two  per  cent  of  the  assessed  valuation  of  such 
city.     The  city  clerk  or  comptroller  shall  keep  a  record  of  all 
bonds  issued,  writh  their  date,  number,  amount  and  when  due. 
Each  bond  must  show  upon  its  face  to  what  class  of  indebted- 
ness it  belongs  and  out  of  what  fund  it  is  payable.   (2712-2717.) 

14.  Funding  Bonds  to  Extend  Time  of  Payment: — 
The  common  council  of  any   city,  when  necessary,  is  author- 
ized to  issue  new  bonds  for  the  purpose  of  extending  the  time 
of  payment  of  any  outstanding  bonds,  but  in  no  case  must  the 
amount  of  indebtedness  be  increased  by  the  issue  of  such  new 
bonds.     (2717.) 

15.  Village    Government : — Incorporated   villages    are 
managed  by  a  council  consisting  of  six  trustees  and  a  presi- 
dent, and  are  authorized  to  provide  public  buildings,  grounds 
and  improvements,  substantially  the  same  as  cities.    The  levy  of 
taxes  and  the  appropriation  of  money  must  be  by  ordinance  or 
resolution  concurred  in  by  a  vote  of  two-thirds  of  all  the  trust- 
ees elected.     Ordinances  within  one  week  from  their  passage 
must  be  published,   and  copies  posted  in  three  public  places 
in  the  village.     (2776,  2852.) 

16.  Loans     in    Anticipation    of    Taxes    or    Special 
Assessments  : — The  council  of  any  organized  village  may,  by 
a  concurring  vote  of  two-thirds  of  the  trustees  elected,  borrow 
in  any  one  year,  in  anticipation  of  the  taxes  for  the  same 
year,  a  sum  not  exceeding  one-half  of  such  tax,  and  in  like 


114      MICHIGAN — VILLAGE,  TOWNSHIP,   AND  WATER  BONDS. 

manner  in  anticipation  of  the  collection  of  any  special  assess- 
ment, made  for  any  local  improvements,  they  may  borrow  any 
sum  necessary,  not  exceeding  such  assessment.  (2952.) 

17.  Loans   for    Public    Improvements: — In    case    a 
greater  amount  is  required  to  provide  public  buildings  or  other 
necessary  corporate  purposes  than  can  be  raised  by  general 
taxation  or  temporary  loans  as  above,  such  amount  may  be 
raised  by  tax  or  loan,  as  in  the  case  of  cities,  when  authorized 
by  a  majority  vote  at  an  annual  or  special  election.     The  ques- 
tion must  be  submitted  by  ordinance  or  resolution,  distinctly 
stating  the  amount  and  purposes  of  the  proposed  expenditure, 
published  in  a  newspaper  in  the  village,  if  one  is  published 
therein,  and  copies  posted  in  six  of  the  most  public  places 
therein  at  least  two  weeks  before  such  election.     The  vote  shall 
be  taken  by  ballot,  the  contents  of  which  shall  be  prescribed 
by  the  ordinance  or  resolution.     Bonds,  wich  the  same  two  per 
cent  limitation,  may  be  issued,  and  a  record  kept,  as  provided  in 
the  case  of  cities.     New  bonds  may  also  be  issued  by  villages  to 
extend  the  time  of  payment  of  any  outstanding  bonds,  as  pro- 
vided in  the  case  of  cities.     (2953-2957.) 

18.  Township  Bonds  : — For  the  purpose  of  providing 
a  town  hall  or  other  public  buildings  for  the  use  of  the  town- 
ship, the  authorities  of  any  township,  when  authorized  by  a 
majority  vote  of  the  qualified  electors  thereof  at  a  legally  called 
meeting,  may  grant  any  sum  of  money,  not  exceeding  one  per 
cent  in  any  one  year  upon  the  taxable  property  thereof,  and 
issue  bonds  in  payment  for  the  same.     A  notice,  stating  the 
amount,  that  such  question  will  be  submitted,  must  be  signed 
by  at  least  twelve  freeholders,  and  copies  posted  in  five  of  the 
most  public  places  in  the  township,  for  ten  days  prior  to  the 
meeting. 

WATER  BONDS. 

19.  City  or  Village  Bonds  for  Water-works : — Any 
city  or  incorporated  village,  for  the  purpose  of  purchasing 
grounds  or  providing  water-works,  may  borrow  money  to  meet 
the  cost  thereof,  and  issue  bonds  of  such  city  or  village,  when 


MICHIGAN — WATER    BONDS — SCHOOL    BONDS.  115 

authorized  by  a  majority  of  the  votes  cast  thereon  at  an  elec- 
tion called  for  the  purpose. 

20.  Amount : — The  total  sum  borrowed  or  raised  by  tax- 
ation the  first  year,  for  any  such  purpose,  shall  not  exceed  ten  per 
cent  of  the  assessed  valuation  of  the  city  or  village,  and  no 
more  than  five  per  cent  thereon   shall  be  borrowed  any  subse- 
quent year  for  that  purposes.     The  rate  of  interest  on   any 
indebtedness  thus  incurred  must  not  exceed  ten  per  cent  per 
annum.     (3090-3091.) 

21.  Cities  or    Villages  Purchasing    Water-works:  —  Any 
city,  town  or  village  may  purchase  any  water- works  from  com- 
panies owning  the  same,  or  may  take  stock  in  any  such  company, 
and  issue  bonds  therefor,  payable  at  such  times  as  may  be  deter- 
mined by  the  council,  and  bearing  not  more  than  eight  per  cent 
interest.     No  stock  shall  be  subscribed  in  any  such  company 
until  authorized  by  a  vote  of  the  electors  of  the  city,  town  or 
village,  as  the  case  may  be.     A  special  tax  of  not  to  exceed 
two  per  cent   may   be  levied  for  the  payment  of  such  bonds. 
(3125-3126.) 

22.  Village  Bonds  for   Water-works: — Incorporated  vil- 
lages are  also  specially  authorized  to  borrow  any  sum  of  money 
to  be  used  exclusively  for  the  construction  and  maintaining  of 
water-works.     The  council  shall  cause   an   estimate   of  the 
expenses  thereof  to  be  made,  and  the  question  of  borrowing 
such  money  submitted  to  the  electors  at  an  annual  or  special 
election.     The  amount  of  such  loan  is  limited  as  in  the  case  of 
cities  or  villages  above,  except  that  after  the  works  have  been 
constructed  the  council  may  expend  in  the  extension  or  repair- 
ing of  the  same  any  sum  not  exceeding  one  and  one-half  per 
cent  of  the  taxable  property  of  the  village,  without  submitting 
the  question  to  a  vote.     (2970  to  2973,  as  amended  in  1887.) 

SCHOOL,  BONDS. 

23.  School  District  Bonds  : — For  the  purpose  of  pur- 
chasing sites,  and  erecting  and  furnishing  schoolhouses  there- 
on, any  school  district,  by  a  two-thirds  vote  of  the  qualified 
electors  present  at  any  annual  or  special  meeting  called  for  that 


Il6  MICHIGAN — SCHOOL   BONDS. 

purpose,  may  borrow  money  and  issue  the  bonds  of  the  district 
therefor. 

24.  Amount  of  Bonds: — The  amount  of  money  which 
may  be  borrowed  by  school  districts  is  limited  as  follows:  those 
having  less  than  thirty  school  children  between  the  ages  of 
five  and  twenty  years  may  borrow  not  to  exceed  three  hundred 
dollars;  those  having  thirty  such  school  children  may  borrow 
not  to  exceed  five  hundred  dollars;  those  having  fifty,  not  to 
exceed  one  thousand  dollars;  those  having  one  hundred,  three 
thousand  dollars;  those  having  one  hundred  and  twenty-five, 
with  an  assessed  valuation  of  not  less  than  one  hundred  and 
fifty  thousand  dollars,  may  borrow  five  thousand  dollars;  those 
having  two  hundred  such  children,  may  borrow  eight  thousand 
dollars;  those  having  three  hundred,  fifteen  thousand  dollars; 
those  having  four  hundred,  twenty  thousand  dollars;  those 
having  five  hundred,  twenty-five  thousand,  and  those  having 
eight  hundred  or  more,  thirty  thousand  dollars. 

25.  How  Issued: — The  bonds  issued  for  the  above  pur- 
poses shall  be  payable  in  not  to  exceed  ten  years,  and  shall  be 
executed  by  the  moderator  and  director  of  the  district.     The 
electors  of  the  district,  may,  at  any  regular  meeting,  levy  a  tax 
to  pay  the  principal  of  such  bonds  as  they  may  become  due. 
(5103  to  5106,  as  amended  in  1887.) 

26.  School    District    Funding    Bonds: — Any   school 
district  may  issue  bonds  to  provide  means  for  the  payment  of 
any   bonded   indebtedness,  when   authorized  so  to   do   by   a 
majority  vote  of  the  electors  of  such  district,  at  any  annual  or 
special  meeting,  previous  notice  that  such  question  would  be 
submitted  having  been  given  in  the  call  for  such  meeting. 
(Ibid.) 

27.  City  School  Districts  : — Kach  incorporated  city  con- 
stitutes a  single  school  district.     The  mayor  and  other  elected 
school  inspectors  constitute  a  board  of  education  having  charge 
of  the  schools  in  such  city  districts.     (2425,  2739,  2741.) 

28.  Borrowing  Money: — For  school  purposes,  the  board 
of  education  may  borrow  not  exceeding  in  any  one  year  one 
per  cent  of  the  taxable  property  of  the  district,  and  issue  bonds 


MICHIGAN — CITY   SCHOOL    BONDS.  1 17 

therefor.  If  a  greater  sum  is  required,  an  additional  one  per 
cent  may  be  raised  by  tax  or  loan,  if  authorized  by  a  majority 
vote  of  the  district,  at  a  special  meeting  called  for  such  pur- 
pose by  the  board  of  education;  notice  of  the  time,  place  and 
object  having  been  given  by  publication  in  some  newspaper, 
and  by  posting  in  ten  public  places  in  such  city,  for  ten  days 
previously.  (2749,  2750.) 

29.  Bonds  to  Extend  Loans: — The  board  of  education 
of  such  school  district  may  also  issue  new  bonds  for  the  pur- 
pose of  renewing  or  extending  any  outstanding  and  maturing 
loans.  (2749.) 


CHAPTER  XL 


WISCONSIN. 


References   are  to   the  Sections  in  the   Statutes  oj   1878,    and  Supple- 
ment of  /88j,    except  as  otherwise  indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

1.  State  Credit  and    Indebtedness : — The    credit    of 
the  state  shall  never  be  given  or  loaned  in  aid  of  any  individ- 
ual, association  or  corporation.     By  a  majority  vote  of  all  the 
members  elected  to  each  house,  the  state  may  contract  debts, 
under  the  provisions  of  the  constitution,  not  exceeding  in  the 
aggregate  one  hundred  thousand  dollars,  for  the  purpose  of 
defraying  extraordinary  expenditures.     (Art.  8.) 

2.  Municipal    Indebtedness  : — No  county,  city,  town, 
village,  school  district  or  other  municipal  corporation  shall  be 
allowed  to  become  indebted,  in  any  manner,  for  any  purpose, 
to  an  amount  in  the  aggregate  exceeding  five  per  cent  of  the 
value  of  its  taxable  property,  as  shown  by  the  last  previous 
assessment  for  state   and   county  taxes   therein.     Any   such 
corporation  incurring  any  indebtedness,  shall  before  or  at  the 
time  of  doing  so,  provide  for  an  annual  tax  sufficient  to  pay  the 
interest  thereon  as  it  accrues,  and  also  to  discharge  the  princi- 
pal within  twenty  years.     (Art.   II,  Sec.  3,  as  amended  Nov. 

3,  i874.) 

3.  Special  Legislation  : — The  legislature  is  prohibited 
from  enacting  any  special  or  private  laws:  (among  other  things) 
for  granting  corporate  powers  or  privileges  except  to  cities. 
(Art.  4,  Sees.  31  and  32,  as  amended  Nov.  7,  1871.) 

COUNTIES. 

4.  County  Boards  : — The  corporate  powers  of  counties 
are  exercised  by  a  county  board  of  supervisors,  composed  of 


V.'ISCOXSIN — COUNTY    BONDS.  I  19 

the  chairman  of  each  of  the  several  town  boards  (or  in  case  of 
the  chairman's  inability  to  act,  some  other  designated  member 
of  such  town  board)  and  the  supervisor  of  each  ward  or  part 
of  a  ward  of  every  city,  and  of  each  incorporated  village  or 
part  thereof,  situated  within  such  county.  When  the  county 
is  one  town  only,  the  supervisors  of  such  town  shall  constitute 
the  county  board  of  supervisors.  The  regular  annual  meeting 
of  the  county  board  is  held  at  the  county  seat  on  the  second 
Tuesday  succeeding  the  first  Monday  in  November  of  each 
year.  Special  meetings  may  be  called  by  the  county  clerk,  on 
the  written  request  of  a  majority  of  the  members  of  the  board, 
specifying  the  time  and  place  of  such  meeting,  not  less  than 
one  week  therefrom.  A  majority  of  the  supervisors  entitled  to 
seats  in  the  county  board  constitute  a  quorum  for  the  transac- 
tion of  business.  The  county  clerk  is  ex-officio  clerk  of  the 
county  board.  (658,  709.) 

5.  Bonds    for   County    Buildings — For    Exchange — 
Amount  Limited : — Counties  are  authorized  to  issue  bonds,  in 
amount  not  exceeding  one  and  a  half  per  cent  of  the  last  assessed 
valuation  thereof,  for  the  purpose  of  providing  necessary  county 
buildings.     Also  for  the  purpose  of  exchanging  or  compromis- 
ing  any  outstanding  bonds,  new   bonds  may  be  issued,  not 
exceeding  the  amount  of  principal  of  the  bonds  to  be  exchanged 
or  compromised.     (658.) 

6.  How  Issued—  Tax — Form  : — Said  bonds  shall  be  issued 
in  pursuance  of  a  resolution  or  ordinance  of  the  county  board, 
providing   the   amount,    denomination,    time    (not  exceeding 
twenty  years),  manner  in  which  and  by  whom  to  be  negotiated, 
and  also  for  an  annual  tax  sufficient  to  pay  the  interest  as  it 
accrues  and  the  principal  at  maturity.     This  tax  shall  be  inca- 
pable of  repeal,  but  collected  annually  and  held  as  a  separate 
fund  for  the  payment  of  such  bonds.     The  bonds  shall  be 
signed  by  the  chairman  of  the  county  board  and  by  the  county 
clerk  and  sealed  with  the  county  seal.1     (658-659.) 

CITIES  AND  VILLAGES. 

7.  Bonds — For  What  Purpose1 : — Any  city  or  village 
1  Also  see  \  14  et  seq. 


I2O  WISCONSIN TOWN    BONDS. 

may  issue  bonds  to  provide  public  buildings,  school  buildings, 
fire  engines  and  apparatus,  water-works,  pumps,  mains  and  res- 
ervoirs; for  grading,  paving,  laying  out  or  altering  streets, 
public  grounds  or  parks;  for  the  purchase  or  improvement  of 
cemeteries;  to  exchange  or  compromise  outstanding  bonds  (to 
an  amount  not  exceeding  the  principal  of  such  outstanding 
bonds),  or  to  accomplish  any  other  purpose  writhin  the  lawful 
power  of  such  corporation.  The  proposition  to  issue  such 
bonds  must  be  submitted  to  and  adopted  by  a  majority  vote 
of  the  people.  (943.) 

TOWNS. 

8.  Town  Board : — The  corporate  powers  of  towns  are 
exercised  by  a  town  board,   composed  of   three  supervisors, 
elected  at  the  annual  town  meeting  held  on  the  first  Tuesday 
of  December.     One  of  the  board  is  designated  as  chairman, 
and  two  constitute    a  quorum. 

9.  Town  Bonds' : — When  authorized  by  a  majority  vote 
of  the  qualified  electors  at  any  annual  town  meeting,  the  town 
board  may  issue  bonds  to  provide  a  town  hall  or  other  town 
buildings,    to    settle    or    compromise   any   legal   outstanding 
indebtedness,  evidenced  by  bonds  or  otherwise,  to  an  amount 
not  exceeding  such  indebtedness;  or  for  the  purpose  of  building 
a  bridge,  costing  over  two  thousand  dollars,  over  any  stream  in 
such  town,  the  issue  in  such  case  not  to  exceed  five  thousand 
dollars.     (776.) 

10.  How  Issued : — Previous  notice  that  such  a  proposi- 
tion will  be  presented  at  the  town  meeting  must  be  given  by  the 
town  clerk  not  less  than  fifteen  nor  more  than  twenty  days 
before  such  meeting,  by  posting  in  three  of  the  most  public 
places,  and  publication  for  five  days  in  a  newspaper  published 
in  such  town.     No  bonds  shall  be  issued  except  in  pursuance 
of  a  resolution  or  order  publicty  read  at  such  meeting,  provid- 
ing the  amount,  denomination,   time  and  place  of  payment, 
interest  not  exceeding  eight  per  cent,  manner  in  which  and  by 
whom  to  be  negotiated,  and  also  providing  an  annual  tax  suffi- 
cient  to   pay  the  interest  as  it  accrues  and  the  principal  at 

Also  see  \  14  et  seq. 


WISCONSIN — SCHOOL    BONDS.  121 

maturity.  This  tax  shall  be  irrepealable.  Town  bonds  shall 
be  signed  by  the  chairman  of  the  town  board  and  by  the  town 
clerk.  (777.) 

SCHOOL  BONDS. 

1 1 .  District    Meetings  :  —  Annual    meetings     of     school 
districts,  in  which  graded  schools  of  two  or  more  departments 
are  taught,  shall  be  held  on  the  second  Monday  of  July,  and 
of  all  other  districts  on  the  last  Monday  of  September,  unless 
it  may  have  been  determined  by  the  preceding  annual  meeting 
to  hold  the  same  on  the  last  Monday  in  August.     The  clerk 
must  give  at  least  six  days'  notice  of  such  meeting  by  posting 
notices  therefor  in  four  or  more  public  places  in  the  district, 
one  of  which  shall  be  at  the  door  of  the  schoolhouse.     Special 
meetings  may  be  called  by  the  clerk,  or  in  his  absence,  by  the 
director,  on  the  written  request  of  five  legal  voters,  in  the  same 
manner,  the  notice  specifying  the  object  of  the  meeting.     No 
tax,  loan  or  debt  shall  be  voted  at  any  such  meeting,  unless 
three-fourths  of  the  legal  voters  shall  have  been  notified  either 
personally  or  by  a  written  notice  left  at  their  places  of  resi- 
dence at  least  six  days  previously.     (425-427.) 

12.  District  Board: — The  officers  of  the  school  district 
are  a  director,  treasurer  and  clerk,  who  are  elected  for  three 
years  at  the  annual  school  meeting,  and  constitute  the  school 
board  of  such  district  for  the  management  of  its  school  affairs. 
(431-432.) 

13.  Borrowing   Money : — The   qualified  electors  of    the 
school  district,  at  a  legally  called  school  meeting,  may  authorize 
the  district  board  to  borrow  money  for  the  purpose  of  aiding  in 
the  erection  of  'a  schoolhouse.     The  question  shall  be  sub- 
mitted by  a  written  resolution,  read  at  the  meeting,  specifying 
the  amount  to  be  borrowed,  rate  of  interest  and  the  time  and 
manner  of  payment,  which  shall  be  in  annual  installments,  the 
last  of  which  shall  be  made  payable  in  not  exceeding  ten  years 
from  the  first  day  of  February  next  ensuing.     The  vote  thereon 
shall  be  taken  by  ballot,  and  a  majority  shall  be  required  to 
authorize  the  loan.     After  the  loan  has  been  made  the  vote 


122  WISCONSIN — REFUNDING   AND   BRIDGE    BONDS. 

thereon  cannot  be  reconsidered.  The  district  board  are  required 
to  levy  a  tax  annually  to  pay  the  interest  and  principal  as  they 
become  due.  (470,  474-476.) 

GENERAL. 

14.  Refunding   Bonds : — Counties,  cities,   villages  and 
towns  are  authorized  to  fund  their  bonded  indebtedness  by 
issuing  new  bonds  of  the  same  amount  and  at  a  same  or  less 
rate  of  interest,  whenever  such  outstanding  bonds  can  be  retired 
by  the   proceeds  realized  from  the  sale  of  the  new  bonds. 
(960  a.) 

15.  Same,  to  Exchange : — The  authorities  of  the  munic- 
ipalities may  issue  new  bonds,  running  not  to  exceed  ten  years, 
in  exchange  at  par,  for  outstanding  bonds,  provided  that  no 
such  extension  shall  be  for  more  than  twenty  years  from  the 
time  the  debt  was  created,  except  in  case  of  bonds  issued  prior 
to  Nov.  i,  1884,  or  they  may,  in  their  discretion,  issue  new 
bonds,  having  not  more  than  twenty  years  to  run,  to  pay  off 
maturing  bonds.     (960  b,  960  c.) 

16.  Sale  of  Refunding  Bonds : — Such  bonds  must  first  be 
offered  for  sale  for  thirty  days  within  the  municipality  issuing . 
the  same.     Notice  of  such  sale  shall  be  given  by  publication  in 
a  newspaper  published  in  such  municipality,  or  if   no  news- 
paper is  published  therein,  by  posting  notices  in  five  public 
places  therein.     The  bonds  shall  be  sold,  at  not  less  than  par, 
to  the  highest  bidder,  offering  to  accept  the  lowest  rate  of 
interest.     Should  there  be  no  sale  in  whole  or  part,  said  bonds 
may  be  disposed  of  at  the  discretion  of  the  proper  authorities, 
but  in  no  case  shall  they  bear  a  higher  rate  of  interest  than 
the  bonds  so  funded,  and  shall  be  payable  at  some  stated  place 
in  Wisconsin.     They  shall  be  of  denomination  not  exceeding 
one  hundred  dollars  nor  less  than  twenty-five  dollars,  but  after 
the  expiration  of  the  said  thirty  days,  during  which  they  are 
required  to  be  offered  as  above,  the  bonds  may  be  issued  in  any 
denomination  deemed  best  by  the  authorities.       (960  c,   as 
amended  in  1883.) 

17.  Bonds   for  Bridges : — Any  county,  town,  city  or 
village  bordering  upon  or  through  which  any  navigable  or 


WISCONSIN — BRIDGE   AND    RAILROAD    AID   BONDS.         123 

meandering  stream  runs,  or  any  two  adjoining  towns  having  a 
mutual  highway  crossing  such  stream,  are  authorized  to  issue 
bonds,  not  exceeding  in  amount  two  per  cent  of  the  taxable 
property  thereof,  for  the  purpose  of  building,  aiding  or  main- 
taining a  bridge  across  such  stream.  But  if  a  tax  shall  have 
been  levied  for  such  purposes  in  any  such  corporation,  its  bonds 
shall  not  be  issued  for  an  amount  exceeding  the  difference 
between  such  tax  and  two  per  cent  of  the  assessed  valuation. 

18.  Question  Submitted : — No  such  bonds  shall  be  issued 
unless  the  question  of  issuing  the  same  shall  have  been  sub- 
mitted, by  a  majority  of  the  corporate  board  or  council,  to  a 
vote  of  the  electors  of  such  municipality,  and  adopted  by  a 
majority  vote  at  an  annual  election,  town  meeting  or  charter 
election,  or  at  an  election  specially  called  for  that  purpose  by 
such  board  or  council.     Previous  notice  must  be  given  as  for  a 
special  election,  and  voting  must  be  by  ballot,  and  the  votes 
canvassed  and  result  returned  as  in  other  elections.     (1320  to 
1322,  as  amended  by  laws  of  1885.) 

19.  Railroad  Aid  Bonds  : — Counties,  cities,  villages  and 
towns  are  authorized  to  issue  bonds,  running  not  longer  than 
twenty  years,  for  the  purpose  of  paying  authorized  subscrip- 
tions to  the  capital  stock  or  mortgaged  bonds  of  any  company 
or  corporation  organized  for  the  purpose  of  building  a  rail- 
road.    (942.) 

20.  Proposition — How  Submitted: — Whenever   any  rail- 
road  company   desires  a  subscription  to  its  capital  stock  or 
mortgaged  bonds  from  any  such  municipality,  it  shall  deliver 
to  the  clerk  thereof,  to  be  filed  and  recorded  by  him,  a  definite 
written  proposition,  signed  by  the  president  and  secretary  and 
under  the  corporate  seal  of  the  company,  stating  the  manner 
in  which  the  subscription  is  to  be  made,  amount  of  bonds 
desired,  time,  when,  how  and  where  payable,  rate  of  interest 
thereon,  when  deliverable,  with  reference  to  the  construction  of 
the  road,  when  the  road  is  to  be  constructed  as  proposed,  an 
agreement  to  issue  the  proposed  stock  or  mortgage  bonds,  equal 
at  par  to  such  bonds  issued,  and  all  other  authorized  terms  pro- 


124  WISCONSIN — RAILROAD    AID    BONDS. 

posed.     This  proposition  must  be  acted  upon  and  accepted  in 
either  one  of  the  following  methods: 

21.  (First:} — Within  three  months  after  the  filing  thereof 
the  company  may,  by  written  request,  require  the  clerk  to  give 
notice  (as  hereinafter  provided  in  the  case  of  calling  an  elec- 
tion to  vote  upon  such  proposition)  that  within  five  or  more 
days  from  the  date  of  such   notice,  a  petition  to  the  proper 
authorities  of  such  municipality  praying  that  the  proposition 
be  accepted,  will  be  presented  to  the  resident  tax-payers  thereof 
for  signatures.     This  petition,  with  a  copy  of  the  proposition 
must  be  a  part  of  the  notice.     If  the  railroad  company,  within 
four  months  thereafter,  deliver  to  said  clerk  such  petition  bear- 
ing signatures  (verified  by  affidavit  of  a  witness)  of  a  majority  of 
the  resident  tax-payers,  as  shown  by  the  last  assessment  roll 
of  such  municipality,  the  proposition  shall  be  deemed  accepted 
and  the  bonds  shall  be  issued  in  accordance  therewith. 

22.  (Second:} — Any  time  within  three  months  after  the 
filing  of  said  proposition,  together  with  a  request  signed  by  at 
least  twelve  resident  freeholders  that  a  vote  be  had  thereon,  the 
county,  town  or  village  board  of  trustees,  or  common  council, 
may,  in  their  discretion,  order  an  election  to  be  had  on  such 
proposition.     The  clerk  shall  publish  notices,  embracing  the 
proposition,    calling  such  election   to  be   held  at  a  time  not 
less  than  thirty  nor  more  than  sixty  days  from  the  date  there- 
of, by  posting  in  three  public  places  in  each  election  district, 
at  least  twenty  days  before  such  election,  and  by  publication 
at  least  three  times  in  a  newspaper  published  in  such  munic- 
ipality, and  if  none  is  published  therein,  then  in  one  published 
in  the  county.     In  case  aid  is  asked  of  a  county,  the  notice 
shall  be  published  in  all  the  newspapers  published  therein. 
Said  election  shall  be  conducted  the  same  as  general  elections, 
except  no  registration  of  voters  is  required.     A  majority  vote 
is  required  to  authorize  the  issuing  of  the  bonds.     If  the  rail- 
road company  elect  to  pursue  the  first  method  of  submitting 
the  proposition,  by  causing  notices  to  be  given  of  the  presenta- 
tion of  this  petition  as  above,  then  no  election  shall  be  held, 
but  the  result  of  such  petition  shall  be  final. 


WISCONSIN — ISSUE   OF    BONDS    GENERALLY.  125 

23.  If  the  issue  of  the  bonds  is  authorized  under  either 
of  the  methods  above  given,  the  company's  proposition  shall 
be  deemed  accepted,  and  the  proper  authorities  shall  cause  the 
necessary  subscription  to  be  made  on  the  company's  books  as 
proposed,  and  shall  provide  by  ordinance  or  resolution  for  the 
executing  and  issuing  of  the  bonds.     But  no  bonds  shall  be 
delivered,  or  be  valid  if  delivered,  until  the  road  aided  shall 
have  been  completed  and  in  operation  by  the  passage  of  cars 
continuously  from  one  terminus  to  the  point  proposed.     After 
the    vote    has    been    carried,  no   defects  or  irregularities  in 
any  of  the  proceedings  preliminary  to  the  election  shall  invali- 
date the  agreement  or  release  the  municipality,  if  the  company, 
relying  on  such  vote,  shall  have  faithfully  performed  its  part 
of  the  agreement.     (942  ct  scq.~) 

24.  Authority  to  Issue  Bonds  Generally — Time  :— 
No  bonds  shall  in  any  case  be  issued  by  any  town,  village  or 
city,  until  a  proposition  for  their  issue  for  the  special  purpose 
shall  have  been  submitted  to  the  people  of  such  municipality 
and  adopted  by  a  majority  of  the  voters  voting  thereon,  or  if 
bonds  are  to  be  issued  to  aid  the  construction  of  a  railroad, 
until  a  proposition  for  the  issue  thereof  shall  have  been  accepted 
in  one  of   the  modes  provided  therefor  under  Railroad  Aid 
Bonds,  nor  shall  any  bonds  be  issued  payable  after  a  period  of 
twenty  years. 

25.  Tax — Municipal  Liability  : — No  such  bonds  shall  be 
issued  until  an  ordinance  or  resolution  shall  have  been  lawfully 
passed  directing  an  annual  levy  of  a  tax,  in  addition  to  all 
other  taxes,  sufficient  to  pay  the  interest  as  it  accrues  and  the 
principal  at  maturity.     Such  tax,  after  the  issue  of  the  bonds, 
shall  be  irrepealable,  and  the  proceeds  thereof  shall  be  kept  in 
a  separate  fund,  irrevocably  pledged  for  the  payment  of  the 
said  bonds  and  interest.     The  proper  authorities  shall  levy  for 
such  purpose  a  tax  not  exceeding  six  mills  on  the  dollar,  and 
may  also  set  apart  any  money  received  from  licenses  or  other 
sources  not  otherwise  disposed  of.    All  territory  within  a  munic- 
ipality issuing  bonds  shall  remain  liable  for  the  payment  thereof 
until  the  same  are  fully  paid.     (943  and  949.) 


126  WISCONSIN — MUNICIPAL    BONDS. 

26.  Bonds — How  Executed: — County  bonds  shall  be 
signed  by  the  chairman  of  the  county  board  and  the  county 
clerk,  town  bonds  by  the  chairman  and  the  town  clerk,  village 
bonds  by  the  president  and  village  clerk,  city  bonds  by  the 
mayor  and  city  clerk,  or  by  such  officers  as  may  be  acting 
officially  in  any  of  such  offices  respectively.     All  bonds  shall 
be  sealed  with  the  corporate  seal  of  the  municipality,  if  there 
be  any  such  seal.     (956.) 

27.  Bond  Record  : — The  clerk  of  towns,  villages,  cities 
and  counties  shall  keep  a  cancellation  book,  containing  the 
record   of   all  bonds  issued,  number  thereof,  amount,  rate  of 
interest,  when  and  for  what  purpose  issued,  when  payable,  and 
when  paid,  exchanged  or  cancelled.     (960  f.) 

28.  Limitations  of  Actions  on  Bonds  : — Actions  upon 
bonds  issued  by  any  town,  county,  city,  village  or  school  district 
must  be  commenced  within  six  years  after  the  cause  of  action 
has  accrued.     (4222) 

29.  Negotiability   of    Municipal    Obligations  :  —  No 
obligation  or  instrument  made  by  any  county,  town,  village 
or  school  district,  shall  be  negotiable,  unless  expressly  author- 
ized by  law.     (1675.) 


CHAPTER  XII. 


MINNESOTA. 


References  are  to  the  Sections  in  the  Statutes  of  1878,  and  Supplements 
thereto,  except  as  otherwise  indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

1.  State  Indebtedness  : — For  the  purpose  of  defraying 
extraordinary  expenses  the  state  may  contract  debts  in  the 
aggregate  not  exceeding  $250,000,  but  such  debts  must  be 
authorized  by  law,  for  some  special  purpose,  by  a  vote  of  two- 
thirds  of  the  members  of  each  branch  of  the  legislature,  which 
law  shall^also  levy  a  tax  sufficient  to  pay  the  annual  interest 
and  the  principal  of  the  debt  within  ten  years  from  the  passage 
of  such  law.     Such  debts  shall  be  by  state  bonds  of   not  less 
than  $500  each,  payable  within  ten  years,  of  which  a  correct 
registry   shall   be  kept    by    the    treasurer.     By    amendment, 
adopted  November,  15,  1872,  additional  bonds  to  an  amount 
not  exceeding  $250,000,  payable  in  not  less  than  ten  years  nor 
more  than  thirty  j^ears,  are  authorized  for  the  erection  or  com- 
pletion of  certain  public  buildings.      (Art.  9,  Sees.  5,  6,  14  a.) 

2.  State  Credit : — The  credit  of  the  state  shall  never  be 
given  or  loaned  in  aid  of  any  individual,  association  or  corpor- 
ation,   except   certain   railroads,  under  amendment  of   1858. 
(Art.  9,  Sec.  9.) 

3.  Limit  of  Municipal  Aid  to  Railroads  : — The  legis- 
lature shall  not  authorize  any  county,  township,  state  or  other 
municipal  corporation  to  issue  bonds  or  to  become  indebted  in 
any  manner  in  the  aid  of  any  railroads  to  an  amount  exceeding 
in  the  aggregate  five  per  cent  of  the  taxable  property  thereof, 
as  shown  by  the  last  assessment  made  for  state  and  county 
purposes.     (Art.  9,  Sec.  15,  as  amended  November  4,  1879.) 


128  MINNESOTA — COUNTY    BONDS. 

4.  Special  Legislation  : — The  legislature  is  prohibited 
from  enacting  any  special  or  private  laws  (among  other  things) 
granting  corporate  powers  or  privileges  except  to  cities.     (Art. 
4,  Sec.  33,  as  amended  Nov.  15,  1881.) 

COUNTIES.' 

5.  Board  of  Commissioners  : — The  corporate  powers 
of  a  county  are  exercised  by  commissioners  under  the  name  of 

"The  Board  of  County  Commissioners  of  the  County  of " 

In  organized  counties  which  poll  eight  hundred  votes  or  more 
the  board  consists  of  five  members,  and  in  all  other  counties  of 
three  members,  whose  term  of  office  is  for  four  years  or  until 
the   election   and  qualification  of    their   successors.     Regular 
meetings  of  the  board  are  held  at  the  county  seat  on  the  first 
Tuesday  of  January  and  on  the  fourth  Monday  of  July  in  each 
year.     Extra  sessions  may  be  called  by  a  majority  of  the  board, 
the  clerk  giving  at  least  ten  days'  notice  of  such  meeting  to  the 
commissioners.     A  majority  of  the   commissioners  constitute 
a  quorum,  but  no  business  shall  be  done  unless  voted  for  by  a 
majority  of  the  whole  board.     The  county  auditor  is  ex-officio 
clerk   of  the  county   board.     (Chap.    8,    Sees.  83  to  102,   as 
amended  in  1885,  and  Sec.  138.) 

6.  County  Bonds  : — No  general  law  exists  authorizing 
counties  to  issue  bonds  except  for  special  purposes,  as  herein- 
after indicated.     County  bonds  have  usually  been  issued  under 
special  acts,  to  which  reference  must  be  had  for  the  provisions 
of  each  particular  case. 

7.  Bonds    for    Steam    Traction    Roads : — Where   a 
majority  of  the  voters  of  the  county,  voting  at  a  special  election, 
called  for  that  purpose  by  the  county  commissioners,  under  a 
notice  as  by  law  required,  vote  in  favor  of  a  road  for  steam 
traction  transportation,  and  an  agreement  is  duly  entered  into 
between  the  authorized   representative   of  the  road   and  the 
county  auditor,  the  board  of  county  commissioners  are  author- 
ized to  issue  the  bonds  of  the  county  for  the  amount  necessary  to 
maintain  or  construct  such  road  as  authorized,  but  the  aggre- 

1  Also  see  ?  20,  et  seq. 


MINNESOTA — CITY    BONDS.  1 29 

gate  amount  of  bonds  so  issued  shall  not  exceed  the  amount  of 
the  estimated  expenses  of  such  road,  as  set  forth  in  the  notice 
calling  the  election  which  authorized  said  improvement,  and  in 
no  case  to  exceed  three  thousand  dollars  for  any  one  mile. 

8.  Form — Sale — Tax: — Said   bonds  shall  be  made  pay- 
able in  the  city  of  New  York,  not  less  than  ten  nor  more  than 
twenty  years  after  date,  with  coupons  providing  for  interest  at 
ten  percent  per  annum,  payable  semi-annually,  and  be  disposed 
of  at  par,  in  payment  for  the  construction  of  said  road.     A  suf- 
ficient tax  to  meet  the  accruing  interest  and  pay  the  bonds  at 
maturity  shall  be  levied  and  collected.     (Chap.  13,  125  to  135.) 

CITY  AND  TOWNS.' 

9.  Funding  Bonds.: — The  common  council  of  any  city 
has  full  power  to  borrow  money  to  pay  any  city  indebtedness, 
and  to  issue  therefor  city  bonds  bearing  interest  at  a  rate  not 
to  exceed  ten  per  cent,  and  redeemable  at  any  time  within  ten 
years,  at  the  discretion  of  such  council.     All  ordinances  of  the 
city  must  be  passed  by  the  affirmative  vote  of  a  majority  of  the 
common  council,  signed  by  the  mayor,  and  published  in  the 
official  paper  of  the  city,  before  the  same  shall  be  in  force. 

10.  Amount   of  Bonds — Authority — Tax: — At    no    time 
shall  said  indebtedness,  bonded  or  otherwise,  exceed  the  sum 
of  fifteen  thousand  dollars,  unless  the  same  be  authorized  by  a 
two-thirds  vote  of  the  legal  votes  cast  at  an  election  held  for  that 
purpose.     The  council  shall  levy  a  tax  of  one  mill  on  the  dollar 
on  the  taxable  property  of  the  city,  for  each  one  thousand  dol- 
lars that  may  be  funded  by  the  said  city  in  bonds,  to  pay  the 
interest  thereon  and  to  create  a  sinking  fund  to  pay  the  bonds 
at  maturity.     (Chap.  10,  Sec.  168.) 

11.  Tax  Limit — Bonds: — The  common  council  may  levy 
taxes,  not  exceeding  in  any  one  year,  one  per  cent   of  the 
assessed  valuation  of  the  city,  to  provide  for  all  current  expenses 
of  the  city,  for  the  opening,    maintaining  and  improving  of 
public  grounds,  and  the  construction  of  buildings  and  other 
public  improvements.     The  council  may  issue  bonds  and  levy 

1  Also  see  \  20  et  seq. 


130  MINNESOTA — TOWN   AND   SCHOOL   BONDS. 

taxes  for  an  amount  exceeding  that  provided  above,  and  in 
other  sections  of  the  act  concerning  cities,  if  the  same  is 
authorized  by  a  majority  of  the  voters  present  and  voting  at 
an  election  held  for  that  purpose.  The  time,  place  and  manner 
of  holding  such  election  to  be  prescribed  by  such  council,  and 
notice  thereof  to  be  given  as  at  other  elections.  No  bonds,  for 
any  purpose,  shall  be  issued  by  the  council  unless  so  author- 
ized. (Chap.  io,  169-171.) 

12.  Town  Bonds: — The  board  of  supervisors  (consist- 
ing of  three  supervisors,  of  whom  two  constitute  a  quorum)  of 
the  organized  townships  of  this  state  are  authorized  to  issue  the 
bonds  or  orders  of  their  respective  towns,  with  coupons  attached, 
in  such  amounts  and  for  such  periods,  not  exceeding  six  years, 
as  they  may  be  directed  by  two-thirds  of  all  the  legal  voters 
voting  at  any  legally  called  town  meeting,  held  for  that  purpose, 
notice  of  such  meeting,  particularly  specifying  the  object  for 
which  it  is  called,  having  been  posted  in  at  least  three  public 
places  in  such  town,  for  not  less  than  ten  days  previous  to  such 
meeting. 

13.  Form — Tax: — Said  bonds  shall  bear  interest  at  not 
exceeding  twelve  per  cent  per  annum,  payable  annually,  and 
the  bonds  and  coupons  shall  be  signed  by  the  chairman  of  the 
board  of  supervisors,   and  countersigned  by  the  town  clerk. 
The  board  of  supervisors  are  required  to  levy,  and  certify  to 
the  county  auditor  each  year,  a  sufficient  tax  on  the  property 
of  the  town  to  provide  for  the  payment  of  the  interest  as  it 
accrues,  and  such  further  sums  in  their  discretion,  not  exceed- 
ing twenty  per  cent  of  the  amount  thereof,  towards  providing  a 
fund  for  the  payment  of  said  bonds.     (Chap,    io,   Sec.  14,  66; 
114  to  166.) 

SCHOOL  BONDS. 

14.  The  trustees  or  board  of  education  of  any  school  dis- 
trict in  this  state  are  authorized  to  issue  bonds  of  their  respect- 
ive districts  with  coupons,  in  such  amount  and  at  such  periods, 
as  they  may  direct  by  a  vote  of  two-thirds  of  the  legal  voters 
present  and  voting,  at  any  legally  called  meeting  of  the  same. 

15.  Form  of  Bonds : — Said  bonds  shall  be  payable  in  such 


MINNESOTA — SCHOOL    BONDS  131 

amounts  and  at  such  times,  not  exceeding  fifteen  years,  as  the 
legal  voters  at  such  meeting  shall  determine,  with  interest  not 
to  exceed  seven  per  cent  per  annum.  The  bonds  and  coupons 
shall  be  signed  by  the  directors  and  countersigned  by  the  dis- 
trict clerk,  or  by  the  president  and  clerk  of  the  board  of  educa- 
tion, as  the  case  may  be.  (Chap.  36,  Sees.  26-27,  as  amended 
March  5,  1887.) 

1 6.  How  Registered  and  Certified : — It  is  made  the  duty 
of  the  clerk  of  the  school  district  to  file  with  the  county  audi- 
tor certified  copies  of  all  the  proceedings  had   in  the  district, 
relating  to  the  issue  of  the  said  bonds,  and  before  any  sale  is 
made  they  shall  be  examined  by  the  auditor  in  connection  with 
such  proceedings,  and  if  satisfied  with  the  legality  of  the  issue, 
the  auditor  shall  register  the  bonds  in  his  office  and  indorse  on 
each  bond  the  following  certificate,  signed  by  him  unaer  his 
official  seal  : 

' '  I  hereby  certify  that  the  within  bond  for dollars 

issued   by school   district of Co.,    Minn.,    is 

issued  in  accordance  with  law,  and  by  authority  of  two-thirds 
of  all  the  legal  voters  of  said  school  district  present  and  voting 
at  a  meeting  of  the  legal  voters  of  said  district,  duly  held  for 

that  purpose,  on  the ....  day  of ,  188 . . ,  that  said  bond  is 

duly  registered  in  this  office,  and  that  said  school  district  is 
legally  organized." 

17.  Sale  of  Bonds — Validity: — Said  bonds   shall  not  be 
sold  for  less  than  par  value,  nor  shall  they  or  the  proceeds 
thereof  be  used  for  any  purpose  other  than  the  purchase  of  a 
site  for,  and  in  the  erection,  completion  and  furnishing  of  a 
schoolhouse  for  such  district,  or  the  payment  of  an  indebted- 
ness incurred  for  such  purpose,  or  for  refunding  such  district's 
indebtedness.     The  validity  or  obligation  of  any  school  district 
bond  or  order  so  registered  and  certified  shall  not  be  questioned 
in  any  court  or  tribunal,  but  every  such  bond  or  order  shall  be 
and  remain  valid  and  binding  upon  the  district  issuing  it. 
(Id.  as  amended  March  5,  1885.) 

18.  Tax  : — The  proper  authorities  of  the  district  issuing 
such  bonds  shall,  on  or  before  the  tenth  day  of  October  of  each 


132  MINNESOTA — SCHOOL    BONDS. 

year  until  the  payment  thereof,  levy  and  certify  to  the  county 
auditor  a  sufficient  tax  on  the  property  of  the  district  to  meet 
the  interest  and  principal  maturing  next  after  such  levy,  and 
in  their  discretion  such  further  sum  as  they  shall  deem  expedi- 
ent, not  exceeding  twenty  per  cent  of  such  maturing  bonds  and 
interest,  as  a  sinking  fund  to  provide  for  the  payment  of  the  same. 
In  case  of  a  failure  to  levy  such  tax  on  account  of  vacancies 
in  the  board  of  trustees,  the  holder  of  any  bond  or  indebtedness 
so  maturing,  and  for  the  payment  of  which  indebtedness  a  tax 
should  have  been  levied  as  above,  may,  any  time  after  October 
tenth,  file  the  same  in  the  office  of  the  county  auditor,  who 
shall  thereupon,  at  the  cost  of  such  holder,  publish  a  notice  of 
such  filing,  stating  the  nature  and  the  amount  of  the  claim, 
for  three  weeks  in  the  newspaper  in  which  was  published  the 
delinquent  tax  list  for  the  previous  year.  Unless  within  twenty 
days  from  the  last  publication  of  the  above  notice,  there  is 
served  upon  the  said  auditor  a  written  notice,  signed  by  not 
less  than  three  persons  who  would  be  affected  by  said  levy, 
setting  forth  that  the  district  has  a  just  and  valid  defense 
against  said  claim;  at  the  time  of  making  the  next  tax  list,  the 
auditor  shall  levy  upon  the  taxable  property  of  the  district 
liable,  a  sufficient  tax  to  pay  the  amount  due  on  such  bonds,  to 
be  collected  as  other  taxes.  When  collected,  the  county  treas- 
urer shall  pay  the  amount  due  on  such  bonds  or  claims  to  the 
legal  holder  thereof  on  the  surrender  of  the  same  to  him. 
(Chap.  36,  Sec.  28;  Laws  of  1885,  Chap.  173,  p.  213.) 

19.  District  School  Meetings — Officers  : — The  clerk 
shall  give  at  least  ten  days'  notice  of  each  annual  or  special  meet- 
ing, by  posting  three  notices,  setting  forth  all  the  objects  for 
which  the  same  is  called,  in  conspicuous  places  in  the  district. 
Special  meetings  are  called  on  the  order  of  the  board  of  trustees, 
or  upon  the  written  request  of  five  or  more  freeholders  of  the 
district.  The  director,  treasurer  and  clerk  of  any  common  school 
district  constitute  a  board  of  trustees  for  such  district.  Inde- 
pendent school  districts  have  a  board  of  six  directors,  known  as 
a  board  of  education,  four  of  whom  constitute  a  quorum.  Meet- 
ings of  the  legal  voters  of  independent  school  districts,  to  vote 


MINNESOTA — RAILROAD   AID    BONDS.  133 

on  the  purchase  or  erection  of  any  schoolhouse  deemed  necessary 
by  the  board  of  education,  require  ten  days'  notice  .of  time,  place 
and  object,  by  publication  in  some  newspaper  in  the  district;  or 
in  case  there  is  none,  by  posting  in  five  of  the  most  public 
places  in  the  district.  Such  meetings  may  determine,  by  a 
majority  vote,  as  to  the  erection  of  schoolhouses  and  pur- 
chase of  sites,  and  the  amount  of  money  to  be  raised  for  such 
purposes.  (Chap.  36,  Sees.  23,  94-111.) 

GENERAL. 

20.  Railroad  Aid  Bonds  : — Any  county,  town  or  incor- 
porated city  or  village  in  this  state  is  authorized  to  issue  bonds 
in  amount  not  exceeding,  with  outstanding  indebtedness,  five 
per  cent  of  the  last  assessed  valuation  thereof,  for  the  purpose 
of  aiding  in  the  construction  of  any  authorized  railroad.     The 
municipality  issuing  such  bonds  shall  be  entitled  to  receive  an 
equal  amount  of  the  capital  stock  of  the  company  aided,  unless 
the  same  is  waived  by  the  county  board  or  other  proper  munic- 
ipal authorities. 

21.  Proposition  Submitted: — Any  railroad  company  desir- 
ing such  aid  shall  deliver  to  the  auditor  of  the  county,  or  to 
the  clerk  of  the  city,  town  or  village,  as  the  case  may  be,  to  be 
by  him  filed  and  recorded,  a  proposition,  signed  by  its  presi- 
dent and  secretary  under  the  seal  of  the  company,  stating  the 
amount  of  bonds  desired,  time  and  manner  of  payment,  rate  of 
interest,  when  to  be  delivered  to  the  company,  with  reference 
to  the  construction  of  the  road,  an  agreement  to  issue  to  the 
municipality  the  required  capital  stock  of  the  company,  and 
any  other  authorized  terms  proposed.     Upon   receipt   of  such 
proposition  the  auditor  or  clerk  shall  publish  a  notice,  contain- 
ing a  substantial  statement  of  said  proposition,  for  an  election 
to  be  held  in  not  less  than  ten  nor  more  than  twenty  days  from 
the  date  thereof.     The  notice  shall  be  posted  in  three  public 
places  in  each  election  precinct,  at  least  seven  days  before  the 
election,  and  published  at  least  twice  in  one  newspaper  in  or 
nearest  to  such  city,  village,  or  town;  and  if  aid  is  asked  of  a 
county,  in  one  newspaper  in  each  village  and  city  therein,  in 
which  one  is  published.     Provided  no  such  election  shall  be 


134  MINNESOTA — RAILROAD    AID    BONDS. 

called,  except  upon  the  filing  in  the  office  of  the  town  clerk  a 
written  statement  in  favor  thereof,  signed  by  the  supervisors, 
town  clerk  and  justices  of  the  peace,  or  any  two  of  them,  to- 
gether, with  at  least  twelve  other  freeholders  of  said  town.  The 
election  shall  be  conducted  as  general  elections,  and  the  result 
filed  with  the  auditor  or  village  clerk.  Only  one  election  under 
this  act  shall  be  held  in  any  one  calendar  year  in  the  same 
county,  city  or  village  or  town.  To  authorize  the  issue  of  the 
proposed  bonds  requires  a  majority  vote,  and  in  the  case  of 
counties  there  must  be  a  majority  vote  in  favor  of  such  propo- 
sition cast  at  a  majority  of  the  election  precincts  in  the  county. 
No  such  bonds  shall  be  delivered  to  the  company  until  the 
completion,  ready  for  the  passage  of  cars,  of  the  road  or  part 
thereof  as  proposed.  (Chap.  34,  Sees.  92-97;  Act  of  March  5, 
1877.) 

22.  Same,  Act  of  1879: — Whenever  any  railroad  com- 
pany shall  make  a  proposition  in  the  form  above  prescribed,  ask- 
ing any  such  municipality  to  issue  its  bonds  as  a  bonus  to  aid 
in  the  construction  of  such  company's  road,  or  offering  to  ex- 
change  the    mortgage   bonds   of  the   company  for   an  equal 
amount  of  municipal  bonds,  to  be  used  in  the  construction  of 
such  railroad,  it  is  the  duty  of  the  proper  authorities  to  act 
upon  such  proposition  and  to  submit  the  same  to  the  electors  in 
the  same  manner  as  provided  above  under  the  act  of  1877.     If 
on  such  submission  the  proposition  is  approved  by  a  majority 
of  electors  voting  thereon,  the  said  authorities  shall  issue  bonds 
to  such  company,  under  the  conditions  contained  in  such  propo- 
sition.    (105  a,  Act  of  1879.) 

23.  Registration  of  Railroad  Aid  Bonds: — Whenever  any 
county,  city,  village  or  township  shall  have  incurred  or  created 
a  debt  under  the  provisions  of  any  law  of  this  state,  to  aid  in 
the  construction  of  any  railway,  the  clerk  or  other  proper  offi- 
cer of  the  municipality  issuing  bonds  in  payment  of  said  debt 
shall  make  a  registration  thereof  in  a  book  kept  for  that  pur- 
pose, showing  the  date,  amount,  number,  maturity,  and  rate 
of  interest  of  each  bond,  and  to  what  railroad  the  same  was 
given,  and  shall  immediately  transmit  a  correct  copy  of  such 


MINNESOTA — RAILROAD    AID    BONDS.  135 

registration  to  the  state  auditor,  who  shall  register  the  same  in 
his  office.  The  holders  of  bonds  previously  issued  are  required 
to  register  them  in  the  said  auditor's  office,  such  registration 
to  show  the  same  facts,  and  under  what  act,  and  by  what 
municipality  the  bonds  were  issued,  and  the  auditor  shall 
under  his  seal  of  office  certify  upon  each  bond  the  fact  of  regis- 
tration, for  \vhich  he  is  entitled  to  receive  a  fee  of  one  dollar 
from  the  holder.  (Chap.  n,Secs.  143,  144;  Act  passed  1871.) 

24.  Tax  to  Pay  Registered  Bonds: — When  bonds   have 
been  registered    as    above,    the  state   auditor  shall  annually 
ascertain  the  amount  of  interest  due  and  accrued  thereon  for  the 
current  year,  and  certify  the  same  to  the  county  auditor  with 
other  taxes  to  be  levied  for  that  year,  and  the  county  auditor  is 
required  to  levy  on  the  taxable  property  of  the  municipality 
liable,  a  sufficient  tax  to  meet  such  interest  and  the  cost  of 
collecting  the  same.     The  tax  so  collected  shall  be  paid  over 
by  the  county  treasurer  to  the  authorized  holder  of  the  coupons 
for  such  interest,  upon  the  presentation  and  surrender  thereof. 
(Id.,  Sees.  145-147,  as  amended  1881.) 

25.  Note  : — By  act  of  March  7,  1881,  the  council  of  any 
city,  borough  or  village  having  a  population  not  exceeding 
ten  thousand  inhabitants,  was  given  the  power,  when  author- 
ized by   a   majority  vote   of  the   electors,  to  issue  bonds  in 
amount  not  exceeding  two  per  cent  of  the  assessed  valuation, 
for  a  city  hall  or  other  municipal  buildings.     But  in  the  opin- 
ion of  the  official  editor  of  the  1883  edition  of  the  Minnesota 
Statutes,  that  law  has  been  repealed  in  effect  by  the  act  of 
March  5,   1883,  relating  to  villages,  which   only  enumerates 
among  the  powers  of  the  village  council   ' '  to  authorize  bonds 
of  the  villages  to  be  issued  in  the  cases  provided  by  law. ' ' 


CHAPTER  XIII. 


IOWA. 

References  are  to  section  numbers  in  the  Statutes  of  1880  and  Supple- 
ments, except  as  otherwise  indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  of  1857. 

1.  State  Credit: — The  state  cannot  loan  its  credit  in 
aid  of  any  individual,  association,  or  corporation,  or  become  a 
stockholder  in  any  such   association  or  corporation,  or  in  any 
way  assume  or  become  responsible  for  the  debts  or  liabilities  of 
any  individual,  association  or  corporation,  unless  incurred  in 
time  of  war  for  the  benefit  of  the  state.     (Art.    7,  Sec.    i;  Art. 
8,  Sec.  3.) 

2.  State  Indebtedness  : — The  state  may  contract  debts 
to  supply  deficiencies  or  failures  in  revenue,  to  an  amount  in 
the  aggregate  not  exceeding  two  hundred  and  fifty  thousand 
dollars,  except  in  case  of  war,  or  to  repel   invasion  or  insurrec- 
tion, unless  authorized  by  some  law  for  some  single  work  or 
object,  to  be  distictly  specified  therein,  which  law  shall  provide 
for  a  tax  to  pay  the  interest  on  said  debt  as  it  accrues   and  the 
principal  within  twenty  years,  and  shall  not  take  effect  until 
submitted  to,  and  approved  by   a  majority  vote  of  all  the  peo- 
ple voting  thereon  at  a  general  election,  notice  of  which  must 
be  published  in  at  least  one  newspaper  in  each  county,  if  any 
is    published  therein,   throughout  the    state  for  three  weeks 
preceding  such  election.      (Art.  7,  Sec.  2  to  5.) 

3.  Municipal     Indebtedness : — No    county    or    other 
political  or  municipal  corporation  shall  be  allowed  to  become 
indebted,  in  any  manner  or  for  any  purpose,  to  an  amount  in  the 

aggregate  exceeding  five  per  cent  of  the  value  of  the  taxable 

(136) 


IOWA — COUNTY    LOANS.  137 

property  within  such  county  or  corporation,  to  be  ascertained 
by  the  last  previous  state  and  county  tax  list.    (Art.  2,  Sec.  3.) 

COUNTIES. 

4.  County  Board  : — Counties  in  this  state  are  corporate 
bodies,  whose  control  and  management  are  vested  in  a  board  of 
three  supervisors,  which  number  may  be  increased  to  five  or 
seven  by  a  majority  vote,  at  an  election  called  on  petition  of 
one- fourth  of  the  electors,  of  the  county.     They  are  elected  for 
three  years,  and  hold  their  regular  meetings  at  the  county  seat 
on  the  first  Mondays  of  January,  April,  June,  September,  and 
the    first   Monday  after    the  general   election  in    each    year. 
Special  meetings  may  be  called  by  the  county    auditor   on 
request  of  a  majority  of  the  board,  by  giving  to  each  member 
of  the  board  at  least  six  days'  written  notice,  specifying  the 
object  of  the  meeting,    and  a  public  notice,  by  publication  in 
not  to  exceed  two  newspapers  in  the  county.     A  majority  of 
the  board  constitute     a  quorum.     The  county  auditor  is  ex- 
officio  clerk  of  the  board.     (294-320.) 

5.  Expenditures — Limit : — It  is  not  competent  for  the 
board  of  supervisors  to  order  the  erection  of  a  courthouse,  jail, 
poorhouse,  or  other  building,  or  bridge,  when  the  probable  cost 
will  exceed  five  thousand  dollars,  or  the  purchase  of  real  estate, 
for  county  purposes,  exceeding  two  thousand  dollars,  until  a 
proposition  therefor  shall  have  been  submitted  to  and  approved 
by  a  majority  of  the  legal  voters  of  the  county  voting  thereon 
at  a  general  or  special  election,  notice  of  the  same  to  be  given 
for  thirty  days  previously,  in  a  newspaper,  if  one  is  published 
in  the  county,  or  if  not,  by  a  written  notice  posted  in  a  public 
place  in  each  township.     Provided,  that  in  counties  having  a 
population  of  more  than  ten  thousand,  for  the  construction  of 
any  county  bridges  within  the  county,  or  toward  the  construc- 
tion of  any  bridge  across  any  unnavigable  river  forming  the  line 
of  such  county,  any  necessary  sum,  not  exceeding  forty  dollars 
a  lineal  foot  for  superstructure,  but  in  no  case  exceeding  fifteen 
thousand  dollars,  ma)'  be  appropriated  by  the  board  of  super- 
visors.    Counties  having  a  population  exceeding  fifteen  thou- 


138  IOWA — -COUNTY    LOANS. 

sand  may  thus  appropriate,  for  bridges  within  the  county,  a  sura 
not  to  exceed  twenty-five  thousand  dollars.1     (303. ) 

7.  Submission  of  Question  to  Borrow  Money: — The  board 
of  supervisors  may  submit  to  the  people  of  the  county  at  any 
regular  election,  or  at  any  special  election  called  for  that  pur- 
pose, the  question  whether  money  may  be  borrowed  to  aid  in 
the  erection  of  any  public  buildings.  The  question  submitted 
must  state  the  amount  desired  to  be  raised,  and  will  not  be 
valid  unless  it  includes  a  provision  for  the  levy  of  a  tax  in 
addition  to  all  other  taxes  for  the  payment  thereof.  The  rate 
of  tax  shall  not  be  more  than  one  per  cent  on  the  county's 
valuation  in  one  year,  and  if  the  object  is  to  borrow  money  for 
the  erection  of  public  buildings,  the  rate  shall  be  such  as  to 
pay  the  debt  in  not  exceeding  ten  years,  and  if  for  highways 
or  bridges,  the  annual  rate  shall  not  be  less  than  one  mill  on 
the  dollar.  The  question  shall  be  published  at  least  four  weeks 
in  some  newspaper  in  the  county,  or  if  there  be  none,  publica- 
tion shall  be  by  posting  the  same  in  at  least  one  of  the  most 
public  places  in  each  township,  and  in  addition  in  at  least  five 
among  the  most  public  places  in  the  county,  one  of  them,  being 
the  door  of  the  courthouse,  for  at  least  thirty  days  previously. 
Such  notice  shall  state  the  time  when  the  same  will  be  voted 
upon  and  form  of  the  question,  and  a  copy  of  such  question 
shall  also  be  posted  up  in  each  voting  place  during  the  day  of 
election.  (310-313.) 

8.  Result  Declared: — The  supervisors,  on  being  satisfied 
that  the  requirements  have  been  substantially  complied  with 
and  that  a  majority  of  the  votes  cast  are  in  favor  of  the  sub- 
mitted proposition,  shall  cause  the  proposition  and  result  to 
be  entered  at  large  in  their  record  minute  book,  and  a  notice 

1  The  members  of  a  board  of  supervisors  violating  these  provisions 
by  voting  to  erect  a  building  or  bridge,  the  probable  cost  of  which  exceeds 
the  amount  above  specified,  without  having  submitted  the  question  to  a 
vote,  are  guilty  of  a  misdemeanor  under  Sec.  3966  of  the  Iowa  Statutes. 
State  v.  Coulee,  25  Iowa,  237.  When  the  erection  of  a  building,  the  prob- 
able cost  of  which  exceeds  five  thousand  dollars,  has  been  thus  voted 
upon,  the  board  are  limited  to  the  amount  authorized  by  such  vote,  and 
an  indebtedness  contracted  beyond  that  amount  is  void.  Reichard  v. 
Warren  Co.,  31  Iowa,  381. 


IOWA — COUNTY    FUNDING    BONDS.  139 

of  its  adoption  to  be  published  in  the  same  manner  and  for  the 
same  time,  as  provided  for  the  preliminary  notices  in  the  previ- 
ous section,  and  the  proposition  to  borrow  money  shall  be  in 
effect  from  the  time  of  the  entering  of  the  result  of  the  vote,  as 
above.  The  record  of  such  adoption  shall  be  presumptive 
evidence  that  all  the  proceedings  necessary  to  give  the  vote 
validity  have  been  regularly  conducted.  (314  to  317.) 

9.  Funding    Bonds1  : — Any    county,    the    outstanding 
indebtedness    of    which   on  the  first  day  of  January,    i888,2 
exceeded  the  sum  of  five  thousand  dollars,  the  board  of  super- 
visors, by  a  vote  of  two-thirds  of  all  the  members  thereof,  are 
empowered,  if  they  deem  it  for  the  public  interest,  to  fund  the 
same,  and  issue  bonds  of  the  county  in  sums  of  not  less  than  one 
hundred  dollars,  nor  more  than  one  thousand  dollars  each,  run- 
ning not  more  than  ten  years  and  bearing  interest  at  not  exceed- 
ing six  per  cent  per  annum,  payable  semi-annually. 

10.  Form  of  Bonds: — Said  bonds  shall  be  substantially 
in  the  following  form: 

No 

The  county  of in  the  state  of  Iowa,  for  value 

received,  promises  to  pay or  order,  at  the  office  of 

the  treasurer  of  said  county,  in on  the  first  day  of. ... 

1 8 . . . . ,  or  at  any  time  before  that  date,  at  the  pleasure  of  the 

county,  the  sum  of dollars,  with  interest  at  the  rate 

of.  .  .per  cent,  per  annum,  payable  at  the  office  of  said  treasurer 

semi-annually,  on  the  first  days  of and in 

each  year  on  presentation  and  surrender  of  the  interest-coupons 
hereto  attached.  This  bond  is  issued  by  the  board  of  supervis- 
ors of  said  county  under  the  provisions  of  chapter of  the 

Code  of  Iowa,  and  in  conformity  with  a  resolution  of  said  board 
dated day  of 1 8 .... 

In  testimony  whereof,   the  said  county  by  its   board   of 
supervisors,  has  caused  this  bond  to  be  signed  by  the  chairman 

1  Also  see  $46  et  seq.  herein,  under  "General." 

-  The  general  Assembly  has  amended  the  above  section  at  each  of 
its  recent  biennial  sessions,  changing  the  date  in  each  case  to  the  year 
in  which  the  amendment  was  made.  The  22nd  G.  A.  changed  it  from 
1886  to  1888. 


140  IOWA — COUNTY    FUNDING    BONDS. 

of  the  board  and  attested  by  the  auditor,  with  the  county  seal 

attached,  this day  of 1 8 .... 

[SEAL]      Chairman  of  Board  of  Supervisors. 

Attest: Auditor 

Interest  Coupon  : 

$ The  treasurer  of county,  Iowa,  will  pay  the 

holder  hereof,  on  the day  of 1 8 ....   at  his  office 

in dollars,  for  interest  on  county  bond 

No issued  under  the  provisions  of  chapter of  the 

Code  of  Iowa. 

County  Auditor. 

(289.) 

22.  Sale  of  Bonds: — The  county  treasurer  shall  sell  or 
exchange  said  bonds  on  the  best  available  terms,  for  any 
indebtedness  so  outstanding,  but  in  no  case  for  less  than  par 
and  accrued  interest.  He  shall  keep  a  record  of  all  bonds  sold 
or  exchanged  by  him,  giving  the  number,  date  of  sale,  amount, 
date  of  maturity,  name  and  postoffice  address  of  purchasers,  and 
if  exchanged,  for  what  indebtedness.  In  case  of  the  subse- 
quent sale  or  transfer  of  any  such  bonds,  the  purchaser  shall 
notify  the  treasurer  thereof  with  his  postoffice  address,  and 
every  such  transfer  shall  be  noted  of  record.  The  treasurer  is 
also  required  to  make  a  full  report  thereof  to  the  board  of  super- 
visors, and  said  bonds  shall  not  be  exchanged  for  any  indebt- 
edness except  by  the  approval  of  the  board.  In  counties 
having  not  less  than  four  thousand  inhabitants,  any  supervisor 
voting  to  issue  bonds  under  this  act  in  excess  of  the  constitu- 
tional limit,  shall  be  held  personally  liable  for  the  excess. 
(290. ) 

12.  Tax: — It  is  made  the  duty  of  the  board  to  cause  to 
be  levied  each  year  upon  the  taxable  property  of  the  county, 
in  addition  to  other  taxes,  a  sufficient  sum  to  pay  the  interest 
on  such  bonds  as  it  becomes  due,  and  such  proportion  of  the 
principal  shall  be  provided  for  each  year,  so  that  at  the  end  of 
three  years  the  sum  raised  from  such  levies  shall  equal  at  least 
twenty  per  cent  of  the  amount  of  bonds  issued;  at  the  end  of  five 


IOWA — COUNTY    FUNDING   AND   DRAINAGE   BONDS.        141 

years  at  least  forty  per  cent  of  the  amount;  and  before  the  date 
of  maturity  of  the  bonds,  shall  be  equal  to  the  whole  amount  of 
principal  and  interest.  The  money  arising  from  such  levies 
shall  be  known  as  the  "Bond  Fund,"  and  shall  be  used  for  no 
other  purpose  than  the  payment  of  said  bonds  and  interest. 
(291.) 

13.  Redemption  of  Bonds: — Whenever  the  amount  in  the 
hands  of  the  county  treasurer  belonging  to  the  bond  fund,  and 
not  required  for  the  payment  of  interest  maturing  before  the 
next  levy,  is  sufficient  to  redeem  one  or  more  bonds,  he  shall 
notify  the  owners  of  such  bonds  in  the  order  of  their  issuance, 
beginning  at  the  lowest,  or  first  number,  that  he  is  prepared  to 
pay  the  same  with  accrued  interest  thereon.  If  not  presented  for 
payment  or  redemption  within  thirty  days  after  the  date  of  such 
notice,  the  interest  thereon  shall  cease,  and  the  amount  due 
thereon  shall  be  set  aside  for  its  paymant  whenever  presented. 
The  required  notice  shall  be  directed  to  the  postoffice  address 
of  the  owner,  as  shown  by  the  record  kept  in  the  treasurer's 
ofiice.     (292.) 

14.  Default  in  Payment: — If  the  board    of   supervisors 
fail  to  make  the  necessary  levy  to  pay  such  bonds  or  interest 
coupons  at  maturity,  and  the  same  shall  have  been  presented 
to  the  county  treasurer,  and  the  payment  thereof  refused,  the 
owner  may  file  the  same  with  the  state  auditor,  to  be  registered 
in  his  office.     Thereupon  the  executive  council,  at  their  next 
session  as  a  board  of  equalization,  and  annually,  at  such  time 
thereafter,  shall  add  to  the  state  tax  to  be  levied  in  the  county 
so  delinquent,  a  sufficient  rate  to  realize  the  amount  of  principal 
and  interest  so  past  due,  or  to  become  due  previous  to  the  next 
levy,  and  the  same  shall  be  levied  and  collected  as  a  part  of  the 
state  tax  and  paid  into  the  state  treasury  to  the  special  credit  of 
such  county,  as  a  bond  tax  to  be  applied  to  the  payment  of 
such  registered  bonds  and  coupons,  until  the  same  are  fully 
satisfied.     (293.) 

15.  Drainage  Bonds  : — Whenever  there  shall  be  filed 
with  the  county  auditor  a  petition  signed  by  one  hundred  legal 
•voters  of  the  county,  setting  forth  that  any  described  body  or 


142  IOWA— DRAINAGE    BONDS — CITIES    AND   TOWNS. 

district  of  land  in  said  county  is  subject  to  overflow,  or  too  wet 
for  cultivation,  and  that  in  the  opinion  of  the  petitioners  the 
public  health,  convenience  or  welfare,  will  be  promoted  by 
draining  or  leveeing  the  same,  such  auditor  shall  appoint  a 
competent  engineer  or  commissioner  to  examine  such  district 
or  lands,  and,  if  necessary,  to  make  a  survey  of  the  same,  and 
report  the  result  of  such  examination,  with  an  estimate  of  the 
cost  of  the  proposed  improvement,  to  the  board  of  supervisors. 
If,  in  the  opinion  of  the  board,  the  estimated  cost  is  greater 
than  should  be  levied  in  any  one  year  on  the  lands  benefited, 
they  may  determine  how  much  shall  be  levied  and  collected 
each  year,  and  issue  drainage  bonds.  The  lands  benefited  may 
be  divided  into  drainage  districts  by  the  board  of  supervisors. 

16.  Form — Amount  of  Bonds — Tax  for  Payment: — Said 
bonds  shall  be  issued  in  sums  of  not  less  than  fifty  dollars  each ; 
bear  not  more  than  eight  per  cent  interest,  and  be  payable  in 
the  proportion  and  at  the  times  when  the  taxes  so  apportioned 
shall  have  been  collected,  but  in  no  case  shall  they  run  longer 
than  fifteen  years,  and  at  least  ten  per  cent  thereof  shall  be 
payable  annually.  The  bonds  shall  be  numbered  consecu- 
tively, and  issued  as  other  county  bonds.  They  shall  specify 
that  they  are  drainage  bonds,  and  designate  the  drainage  dis- 
trict on  account  of  which  they  are  issued.  In  no  case  shall  the 
amount  of  bonds  exceed  fifty  per  cent  of  the  assessed  valuation 
of  the  lands  in  such  district,  as  shown  by  the  last  assessment. 
Each  bond  so  issued  shall  express  on  its  face  that  the  same 
shall  only  be  paid  by  taxes  levied  on  the  lands  within  the  dis- 
trict benefited,  and  in  no  case  shall  any  tax  be  levied  for  the 
payment  thereof  on  any  property  outside  of  such  district. 
(1217;  120  to  126,  as  amended  in  1888.) 

CITIES  AND  TOWNS. 

17.  Classification :  —  Cities  having  a  population  of 
fifteen  thousand  and  upward,  are  cities  of  the  first  class;  those 
having  a  population  exceeding  two  thousand  but  not  exceed- 
ing fifteen  thousand,  are  cities  of  the  second  class;  and  every 
municipal  corporation  having  a  population  not  exceeding  two 


IOWA — CITY    AXD   TOWN    LOANS.     '  143 

thousand,  is  an  incorporated  town.  It  is  the  duty  of  the  gov- 
ernor, auditor  and  secretary  of  state,  or  any  two  of  them,  within 
six  months  of  the  filing  with  the  secretary  of  state  of  any  cen- 
sus taken  by  authority  of  the  state,  or  any  town  or  city  council, 
to  ascertain  what  cities  or  towns  are  entitled  to  advancement 
under  the  above  classification,  and  of  the  governor  to  cause  a 
statement  thereof  to  be  published  in  Des  Moines,  and  also  in 
the  city  or  town  so  advanced.  At  the  next  regular  annual 
election  of  municipal  officers,  such  city  or  town  shall  proceed 
to  organize  according  to  its  new  grade.  (507  tc  510.) 

18.  Incorporated    Towns  ; — The  corporate  authority  of 
incorporated  towns  is  vested  in  a  council    composed  of  the 
mayor,  recorder,  and  six  trustees  elected  for  such  purpose,  a 
majority  of  whom  constitute  a  quorum  for  the  transaction  of 
business  at  any  of  the  meetings  of  such  council.     (511.) 

19.  Municipal  Loans : — Loans  may  be   negotiated   by 
any    municipal    corporation  in  anticipation  of   the   revenues 
thereof,  but  the  aggregate  amount  of  such  loans   shall    not 
exceed  the  sum  of  three  per  cent  upon  the  taxable  property  of 
any  city  or  town;  except  that  in  those  cities  having  not  less 
than  thirty-five  hundred  and  not  over  six  thousand  inhabitants, 
such  loans  shall  not  exceed  five  per  cent  upon  the  taxable 
property  thereof.      (500,  as  amended  by  the   i6th  G.  A.,  in 
1878;  and  2oth  G.  A.,  in  1884.) 

2p.  Funding  Act  of  1876  : — Cities  and  towns  are  author- 
ized to  adjust,  renew  or  extend  any  of  their  indebtedness, 
evidenced  by  bonds  or  other  negotiable  instruments  hereto- 
fore issued  and  outstanding,  and  issue  bonds  or  other  new 
securities  therefor,  but  not  for  a  greater  amount  than  is  due 
thereon.  (500;  Sees,  i  to  4. ) 

21.  Funding  Act  of  1886 : — Any  incorporated  city 
having  a  population  of  not  less  than  seven  thousand  under  the 
census  of  1885,  and  whose  outstanding  indebtedness  evidenced 
by  warrants  exceeded  ten  thousand  dollars  at  the  date  of  the 
passage  of  such  act,  was  authorized  to  fund  that  indebtedness 
with  new  bonds,  in  denominations  of  not  less  than  one  hundred 
dollars,  running  not  more  than  twenty  years,  and  bearing 


144  IOWA — CITY    FUNDING    BONDS. 

interest  at  not  exceeding  seven  per  cent,  payable  semi-annu- 
ally,  and  signed  by  the  mayor  and  attested  by  the  auditor  or 
clerk,  the  coupons  being  signed  by  the  auditor  or  clerk. 

22.  Sale — Record: — Said    bonds    may    be    sold    or   ex- 
changed by  the  city  treasurer  for  such  outstanding  indebted- 
ness, at  not  less  than  par  and  accrued  interest.     The  treasurer 
shall  keep  a  record  of  all  bonds  sold  or  exchanged,  giving  the 
number,   date  of  sale,   amount,   date  of  maturity,   etc.,  as   is 
provided  in  the  case  of  county  bonds. 

23.  Tax — Redemption — Default  in   Payment : — A    suffi- 
cient tax  is  required  to  be   levied   to  pay  the  interest  as  it 
becomes  due,  and  to  pay  at  least  twenty  per  cent  of  the  prin- 
cipal within  five  years,  and  all  of  such  bonds  at  maturity.    Said 
bonds   shall   be   redeemed   in   the   order  of  issue.     As  fast  as 
sufficient  money  accrues  to  pay  one  or  more  bonds,  the  treas- 
urer shall  notify  the  owner  by  a  notice  mailed  to  his  recorded 
address,  and  if  not  presented  within  thirty  days,  the  interest 
thereon  shall  cease.     In  case  of  default  in  the  payment  of  such 
bonds  or  interest  thereon,  they  may  be  filed  with  the  state  audi- 
tor, and  taxes  for  their  payment  collected  with  the  state  taxes 
substantially  in  the  same  manner  as  is  provided  in  the  case  of 
county  bonds.     (Chap.  78,  2ist  G.  A.,  1886.) 

24.  Funding  Act  of  1888 : — Any  incorporated  city  hav- 
ing a  population  of  five  thousand  or  more,  according  to  the 
census  of  1885,  whose  indebtedness  evidenced  by  warrants,  ex- 
ceeds the  sum  of  ten  thousand  dollars,  may  fund  the  same  with 
bonds  in  sums  not  less  than  one  hundred  nor  more  than  one 
thousand  dollars  each,   running  not  more  than  twenty  years, 
and  bearing  interest  at  not  exceeding  six  per  cent,  payable 
semi-annually.      Said    cities  may  also    in  the  same  manner 
refund  their  indebtedness  evidenced  by  bonds  heretofore  issued. 

25.  Sale — Limit — Tax: — The  bonds  so  issued  may  be 
sold  or  exchanged,  at  not  less  than  their  par  value,  for  any 
indebtedness   of  such   city,  evidenced   by   warrants   or  bonds 
thereof  outstanding  at   the  passage  of  this  act.     Said  bonds 
shall  not  be  issued  for  any  other  purpose  than  to  fund  such 


IOWA — CITY    FUNDING    BONDS.  145 

indebtedness  evidenced  by  warrants  outstanding  at  the  date  of 
the  passage  of  this  act,  or  to  refund  outstanding  bonds  at  such 
time,  or  by  contracts  existing  at  such  date  and  to  be  per- 
formed within  the  year  1888.  The  city  council  shall  cause  to 
be  assessed  annual!}-  in  addition  to  all  other  taxes,  a  sum  suffi- 
cient to  pay  the  interest  of  such  bonds,  and  such  proportion  of 
the  principal  that  at  the  end  of  five  years  the  sum  raised  shall 
equal  at  least  twenty  per  cent,  at  the  end  of  ten  years  fort)-  per 
cent,  at  the  end  of  fifteen  years  sixty-five  per  cent,  and  at  or  before 
maturity  the  whole  amount  of  said  bonds  and  interest.  The 
bonds  are  to  be  redeemed  substantially  the  same  as  provided 
under  the  act  of  1886.  The  act  also  provides  for  the  filing  of 
defaulted  bonds  or  coupons  with  the  state  auditor  for  collec- 
tion.1 (Chap.  17,  22  G.  A.,  approved  April  3rd;  and  in  force 
April  yth,  1888.) 

26.  Refunding  Act  of  1888,  As  to  Certain  Cities: — Any 
city,  having  a  population  of  two  thousand,  and  organized 
under  a  special  charter,  is  authorized  by  a  two-thirds  vote  of 
the  city  council,  if  deemed  to  be  of  interest,  to  refund  its  in- 
debtedness evidenced  by  bonds  outstanding  at  the  passage  of 
this  act,  with  new  bonds  of  the  denomination  of  not  less  than 
one  hundred  nor  more  than  one  thousand  dollars,  running 
not  more  than  twenty  years,  and  bearing  interest  at  not  ex- 
ceeding six  per  cent,  payable  semi-annually.  The  principal 
thereof  shall  be  payable  at  the  city  treasurer's  office,  but  the 
interest  may  be  payable  in  New  York,  Boston  or  Chicago. 
The  bonds  shall  be  signed  by  the  mayor,  and  attested  by  the 
clerk,  with  the  city  seal  attached,  in  an  open  session  of  the 
council.1  The  bonds  shall  be  sold  at  not  less  than  par,  or  may 
be  exchanged  for  such  outstanding  bonds,  and  a  tax  of  not 
exceeding  two  mills  on  the  dollar  shall  be  levied  annually  to 
meet  the  payment  of  the  principal  and  interest  of  such  bonds 
as  they  mature.  Any  defaulted  bonds  or  coupons  may  be  filed 
with  the  state  auditor  for  collection.  (Chap.  19,  22  G.  A., 
approved  March  loth,  and  in  force  March  i3th,  1888.) 

1  These  acts  give  forms  which  are  to  be  substantially  followed  in  the 
issue  of  the  bonds.  Both  recite  a  resolution  of  the  city  council,  by  date, 
and  the  act,  by  chapter,  under  which  they  are  issued. 


146  IOWA TOWN    AM)    CITS'    KOXDS. 

27.  Funding  Town  Bonds': — Incorporated  towns  hav- 
ing outstanding    bonded  indebtedness  of  not  less  than    one 
thousand  dollars  past  due  at  the  passage  of  this  act,  are  author- 
ized by  a  two-thirds  vote  of  the  town  council   to  refund  the 
same  with  new  bonds,  in  sums  of  not   less  than    one  hundred 
nor  more  than  one  thousand  dollars,    running  not  more  than 
twenty  years,  redeemable  after  five  }Tears,  and  bearing  interest 
at    not    exceeding    seven    per   cent,    payable   semi-annually. 
(Chap.  20,  22  G.  A.,  approved  April   i3th,   and  in  force  April 
i4th,  1888.) 

28.  District  Improvement  Bonds,  In  Cities  of  the  First 
Class  : — Any  city  of  the  first  class  so  organized  since  Janu- 
ary i,  1 88 1,  or  any  city  organized  under  a  special  charter/  may 
create  improvement  districts  for  the  opening,  extending,  widen- 
ing, grading,  curbing,  paving,  guttering,  or  otherwise  improv- 
ing of  any  street,  highway  Or  alley  therein.     So  much  of  the 
cost  of  such  improvement  as  is  assessed  against  the  property 
therein,  may  be  made  payable,  one-fifth  in  ninety  days,  one- 
fifth  in  two  years,  one-fifth  in  four  years,  one-fifth  in  six  years, 
and  one-fifth  in  eight  years,  such  deferred  installments  to  bear 
interest  at  the  rate  of  six  per  cent  per  annum.     To  pay  the 
costs   of  any   such   improvement,  the   city  council  may  issue 
bonds  of  the  city,  to  be  called  "Improvement  Bonds  of  District 
No , "  and  divide  the  same  into  four  series,  each  not  ex- 
ceeding one-fifth  of  the  cost  of  such  improvement,  and  payable 
in  not  exceeding  2,  4,  6,  and  8  years  respectively.     Said  bonds 
shall  bear  not  to  exceed  six  per  cent  interest,   payable  annu- 
ally or  semi-annually  with  interest  coupons  attached,  and  shall 
express  on  their  face  the  name  of  the  street,  highway  or  alley, 
to  defray  the  cost  of  which  they  are  issued.     They  may  be 
issued  in  sums  of  from  one  hundred  to  one  thousand  dollars, 
and  sold  at  not   less  than  par.     Special  assessments  so   levied 
constitute  a  sinking  fund  for  the  payment  of  the  bonds  and 
interest.     (466,  chap.  60,  20  G.  A.,  1884  as  amended  by  chaps 
160,  21  G.  A.,  1882,  and  14,  22  G.  A.,  1888.) 

1  Also  see  §  46  et.  seq.  herein. 

2  As  amended  by  Chap  14.  22  G.  A.,  1888 


IOWA — CITY    IMPROVEMENT    AND   SEWERAGE    BONDS.       147 

29.  City  Improvement  Bonds: — If  the  payment  of  any 
portion  of  the  costs  of  such  improvements  is  made  chargeable 
against  the  city  generally,  the  city  council  may  issue  bonds  of 
the  city,  running  not  to  exceed  twenty  years,  and  bearing  not 
to  exceed  six  per  cent  interest,  payable  semi-annually,  to  be 
called  "City  Improvement  Bonds."     Such  bonds  shall  not  be 
sold  at  less  than  par.1     (Ibid.) 

30.  Sewerage  Bonds  : — In  case  any  city  of  the  first  class 
so  organized  since  January  ist,  1881,  shall  assess  the  whole  or  a 
part  of  the  cost  of  any  sewer  against  the  adjacent  property 
liable,  such  special  assessment  may  be  made  payable  in  five  in- 
stallments; one-fifth  in  sixty  days,  and  one-fifth  in  two,  three, 
four  and  five  years  respectively,  the  deferred  installments  to 
bear  interest  at  seven  per  cent.     Such  city  may  also  provide 
that  the  cost  of  such  sewer  may  be  paid  partly  or  wholly  from 
the  general  revenue  fund,  and  for  the  purpose,  may  levy  a 
sewerage  tax,  not  to  exceed  in  any  one  year  two  mills  on  the 
dollar  of  the  taxable  property  of  such  city,  or  of  the  sewerage 
district  to  be  organized  for  the  purpose.     In  case  a  special  tax 
is  levied,  payable  in  installments,  as  above  provided,  the  city 
may  issue  its  bonds,  to  be  called  ' '  Sewerage  Bonds, ' '  and  divide 
the  same  into  four  series,  becoming  due  in  not  exceeding  two, 
three,  four  and  five  years  respectively,  each  series  being  for 
any  amount  in  the  aggregate  not  exceeding  the  amount  of 
the  special  assessment  installment  due  the  same  year,  together 
with  the  special  tax  which  the  city  proposes  to  levy  generally 
on  the  taxable  property  of  said  city  or  sewerage  district.     Said 
bonds  may  bear  interest  at  not  exceeding  six  per  cent,  payable 
annually  or  semi-annually  as  may  be  provided  by  the  council, 
with  interest  coupons  attached,  and  shall  express  on  their  face 
the  name  of  the  street,  highway,  avenue  or  alley  on  which  the 
sewer  is  located,  to  defray  the  cost  of  which  they  are  issued. 
They  shall  be  sold  at  not  less  than  par,  and  the  special  assess- 

1  By  chap.  12,  22  G.  A.  1888,  such  cities  of  the  first  class  are  author- 
ized to  levy  a  five  mill  tax  to  create  a  fund  to  pay  for  the  improvement 
of  street  intersections,  or  to  anticipate  such  tax  by  issuing  bonds  run- 
ning not  more  than  twenty  years,  substantially  as  provided  for  city 
sewer  bonds,  ?  31  herein. 


148  IOWA — CITY    BONDS. 

raent  and  taxes  so  levied  as  above  shall  constitute  a  sinking 
fund  for  their  payment.1  (481,  chap.  162  of  lyth  G.  A.,  as 
amended  by  chap.  25,  2oth  G.  A.,  1884;  chap.  160,  2ist  G. 
A.,  1886.) 

31.  City  Sewerage   Bonds   for  Street  Intersections, 
etc.:—  Such  cities  of  the  first  class  are  authorized  to  levy  a  tax 
not  exceeding  five  mills  on  the  dollar,  for  the  purpose  of  cre- 
ating a  fund  to  pay  the  cost  of  constructing  sewers  at  the  inter- 
sections of  streets,  alleys  or  in  other  places  where  such  expenses 
are  not  assessable  against  adjacent  property;  or  for  the  purpose 
of  paying  any  part  of  the  cost  of  sewers  which  may  be  paid  or 
advanced  by  such  city.     To  anticipate  such  sewer  tax,  the  city 
may    issue    sewerage  bonds,  running  not  to   exceed   twenty 
years.     (Chap.  7,  22  G.  A.) 

32.  Public  Improvement  Bonds  : — In  any  city  of  the 
first  class  containing  a  population  of  over  thirty  thousand,  as 
shown  by  the  last  census,  for  the  purpose  of  providing  for  the 
payment  of  the  expenses  of  paving,  curbing  or  sewering  any 
street,  the  council  may,  from  time  to  time  as  the  work  pro- 
gresses,   make  requisitions   upon  the   mayor  for  the  issue  of 
bonds  of  the  city  in  such  sums  as  shall  be  deemed  best,  and  it 
is  made  the  duty  of  the  mayor  to  make  and  execute  such  bonds, 
to  an  amount  not  exceeding  the  amount  of  the  contract  price 
of  such  improvement  and  the  additional  expense  attending  the 
same. 

33.  Form  of  Bonds: — Said  bonds  shall  recite  the  name 
of  the  street  or  streets  improved  and  on  account  of  which  they 
are  issued,  be  signed  by  the  mayor,   and  countersigned  by 
the  city  clerk,  with  the  corporate  seal  of  the  city  affixed.     They 
shall  all  bear  the  same  date,  and  be  payable  seven  years  there- 
after, but  redeemable  at  any  time  at  the  option  of  the  city,  and 
shall  bear  interest  at  not  to  exceed  six  per  cent  payable  semi- 
annually.     They   shall   be   registered  by   the  city  clerk  in  a 
book  kept  for  that  purpose,  and  sold  at  not  less  than  par. 

1  An  amendment  passed  in  1888  (chap.  6)  provides  that  two  thirds 
of  the  council  shall  be  required  to  confirm  the  assessment ;  that  the  as- 
sessment shall  not  exceed  three  dollars  per  lineal  foot ;  and  other  de- 
tails as  to  such  assessment. 


IOWA — CITY    AND    TOWX    BONDS.  149 

34.  Special  Assessments  for  their  Payment ; — Special  as- 
sessments for  the  payment  of  such  improvements  may  be  made 
payable  in  seven  equal  installments,   bearing  six  per  cent  in- 
terest until  paid,  the  first  installment  being  payable  at  the  time 
of  the  next  succeeding  semi-annual  payment  of  taxes,   and  the 
others  annually  thereafter.     The  proceeds  from  these  assess- 
ments  constitute  a  fund  for  the  payment  of  said  bonds  and 
interest,  but  when  there   is  no   fund  from  which  to  pay  such 
interest  as  it  matures,  the  council  is  authorized  to  make  a  tem- 
porary loan  for  that  purpose.     The  city  council  shall  not  have 
the    right    to   authorize    any  such   improvement  unless   the 
owners  of  two-thirds  of  the  front  feet,  fronting  on  the  street  to 
be  improved,  petition  therefor,  and  unless  the  same  is  voted  for 
by  three-fourths  of  the  members  of  the  council.     (Chap.  168, 
21  G.  A.,  1886,  as  amended  by  chap.  5,  22  G.  A.,  1888.) 

35.  Water-works,   Gas-works    and    Electric    Light 
Plants  : — Any   incorporated   city  or   town  may  erect  water- 
works, or  establish  and  maintain  gas-works,  or  electric  light 
plants,  or  authorize  the  erection  of  the  same,   but  no  such 
works  shall  be  erected  or  authorized  until  a  majority  of  the 
voters  of  the  city  or  town,  at  a  general  or  special  election,  by  a 
vote,  approve  the  same. 

36.  Bonds  for  Gas-works  and  Electric  Light  Plants  : 
— Any  such  incorporated  city  or  town,  for  the  purpose  of  estab- 
lishing gas-works  or  an  electric  light  plant,  may  issue  bonds 
running  not  more  than  twenty  years,  and  bearing  interest  at 
not  to  exceed  six  per  cent.     The  question  of  the  establishment 
of  such  gas-works  or  electric  light  plant,  may  be  submitted  to 
a  vote  at  any  general  election,  or  at  any  election  specially 
called  for  that  purpose,  or  the  mayor  shall  submit  such  ques- 
tion upon  a  petition  of  twenty-five  property  owners  of  each 
ward  in  the  city  or  town.     Notice  of  said  election  shall  be 
given  in  two  newspapers,  if  so  many  are  published  in  said  city 
or  town,  if  not,  then  in  one,  for  at  least  two  consecutive  weeks. 
(471  as  amended  by  chaps,  n  and  26,  22  G.  A.,  1888.) 

37.  Bonds    for    Water-works    in    Cities   of  Second 
Class  : — Any  city  of  the  second  class,  which  has  determined 


I5O  IOWA — SCHOOL    BONDS. 

or  may  determine  to  erect  water-works  under  the  above  provis- 
ion, may  for  such  purpose  issue  bonds  bearing  interest  at  a  rate 
not  to  exceed  six  per  cent,  and  running  not  more  than  twenty 
years.     (Chap.  10,  22  G.  A.,  in  force  Feb.  23,  1888.) 
SCHOOL  BONDS. 

38.  Bonds  of  Independent    School    Districts  : — For 
the  purpose  of  redeeming  outstanding  bonds,  and  erecting  and 
completing    schoolhouses,  independent    school    districts     are 
authorized  to  borrow  money  and  issue  negotiable  bonds  of  the 
district.     The  directors  of  any  such  district  may  submit  to  the 
voters  thereof,  at  any  annual  or  special  meeting,  the  question  of 
issuing  such  bonds,   notice  being  given  by  the  secretary,  by 
posting  the  same  in  three  public  places  in  said  district,  and  by 
publication  in  a  newspaper  published  therein,  for  two  weeks 
previously.     A  majority  of  all  the  votes  cast  on  the  submitted 
question  is  required  to  authorize  the  issue  of  such  bonds  by  the 
board  of  directors. 

39.  For?n  of  Bonds: — Said    bonds    shall    be    issued    in 
denominations  of  not  less  than  twenty-five  dollars  nor  more 
than  one  thousand  dollars,  bearing  interest  not  to  exceed  ten 
per  cent  per  annum,  which  may  be  paid  semi-annually.     The 
bonds  shall  become  due  in  not  more  than  ten  years  from  date, 
and  payable  at  the  pleasure  of  the  district  at  any  time  before 
maturity.     They  shall  be  given  in  the  name  of  the  independ- 
ent district,  and  shall  be  signed  by  the  president  of  the  board, 
attested  by  the  secretary  and  delivered  to  the  treasurer,  who 
shall  negotiate  the  same  at  not  less  than  par,  and  countersign 
them  when  negotiated. 

40.  Limit  of  Amount — Tax: — No  district  shall  permit  a 
greater  outstanding  indebtedness  than  five  per  cent  of  the  last 
assessed  valuation  of  such  district.     It  is  made  the  duty  of  the 
electors  of  any  independent  school  district  which  has  issued 
bonds,  to  provide  a  sufficient  tax  for  the  payment  of  the  same 
as  they  become  due,  and  in  case  of  the  failure  of  the  electors  to 
so  provide,  the  district  board  may  vote  a  sufficient  rate  on  the 
taxable  property  of  the  district  to  pay  the  interest  and  any  por- 
tion of  the  principal  becoming  due.     (1821  to  1823.) 


IOWA — SCHOOL    BONDS.  15! 

41.  Refunding     School     Bonds: — Any      independent 
school  district  or  district  township  having  a  bonded  indebted- 
ness outstanding,  is  authorized  to  issue  bonds   at  any  rate  of 
interest    not  exceeding    seven    per  cent  per  annum,    payable 
semi-annually,  for  the  purpose  of  funding  said  indebtedness. 
Said  bonds  shall  be  issued  upon  a  resolution  of  the  board  of 
directors  of  such  district,  which  in  order  to  be  valid  must  be 
adopted  by  a  two-thirds  vote  of  said  directors. 

42.  Form  of  Bonds: — Said  bonds  shall  be  in  denomina- 
tions of  not  less  than  one  hundred  dollars,  nor  more  than  one 
thousand  dollars,  and  shall  be  signed  by  the  president,  and 
countersigned  by  the  secretary  of  such  district  or  township. 
The  principal  and  interest  may  be  made  payable  wherever  the 
board  of  directors  may,  by  resolution,  determine.     The   bonds 
shall  run  not  more  than  ten  years  and  be  payable  at  the  pleasure 
of  the  district  after  five  years  from  the  date  of  their  issue. 

43.  Sale  of  Bonds: — The  treasurer  of  the  district  may  sell 
said  bonds  at  not  less  than  par,  and  apply  the  proceeds  to  the 
payment  of  such  outstanding  bonded  indebtedness,  or  he  may 
exchange  such  new  bonds  for  the  outstanding  bonds  at  par.  He 
is  required  to  keep  a  record  of  the  parties  to  whom  he  sells  the 
bonds,  with  their  postoffice  address. 

44.  Tax — Redemption  of  Bonds: — A  tax  for  the  payment 
of  the  principal  and  interest  of  said  bonds  shall  be  raised  by 
tfie  district  electors,  or  if  they  fail  so  to  do,  by  the  board  of 
such  district.     If  the  district  shall  fail  or  neglect  to  levy  said 
tax,  the  board  of  supervisors  of  the  county  shall,  upon  applica- 
tion of  the  owner  of  said  bonds,  levy  said  tax.     Whenever  said 
bonds  become  payable  at  the  pleasure  of  the  district,  in  order 
to  stop  the  interest  thereon,  the  treasurer  shall  give  the  owner 
ninety  days'  written  notice  of  the  readiness  of  the  district  to 
pay,  and  the  amount  it  desires  to  pay,  by  a  notice  directed  to 
the  postoffice  address  of  such  owner,  as  shown  by  the  record 
of  the  treasurer.     (1824;  chap.  132,  i8th  G.  A.) 

45.  Bonds  to  Pay  Judgment    Indebtedness  : — School 
districts  and  township  districts  are  authorized  to  issue  bonds, 
upon  a  resolution  of  the  board  of  directors,  to  pay  any  judg- 


152  IOWA — REFUNDING    BONDS. 

ments  obtained  against  such  district  or  township  prior  to  the 
passage  of  the  act  of  1880.  Said  bonds  shall  run  not  more 
than  ten  years,  bear  interest  at  not  to  exceed  eight  per  cent,  pay- 
able semi-annually,  be  signed  by  the  president,  and  counter- 
signed by  the  secretary  of  the  district,  payable  at  the  pleasure 
of  the  district,  or  township  issuing  the  same,  and  registered 
by  the  county  auditor.  (1824;  chap.  51,  i8th  G.  A.) 

GENERAL. 

46.  Refunding  Bonds  : — If  it  is  deemed  for  the  public 
interest,  by  a  vote  of  two-thirds  of  the  board  of  supervisors,  or 
city  or  town  council,  as  the  case  may  be,  any  county,  city  or 
town  is  authorized  to  refund  its  bonded  indebtedness  outstand- 
ing, and  to  issue  bonds  of  such  corporation  in  sums  of  not  less 
than  one  hundred  nor  more  than  one  thousand  dollars,  having 
not  more  than  twenty  years  to  run,  redeemable  at  the  pleasure 
of  the  corporation  after  five  years  from  date,  and  bearing  interest, 
payable  semi-annually,  at  a  rate  not  exceeding  six  per  cent. 

47.  Form  of  Bonds: — Said  bonds  shall  be  substantially 

of  the  following  form: — The of ,  in  the  state  of 

Iowa,  for  value  received,  promises  to  pay or  order,  on 

the  first  day  of or  at  any  time  before  that  date,  after  the 

expiration  of  five  years,  at  the  pleasure  of  the  said the 

sum  of dollars,  with  interest  at  the  rate  of per  cent 

per  annum,  payable  semi-annually,  on  the  first  days  of 

and in  each  year,  on  presentation  and  surrender  of  the 

interest  coupons  hereto   attached.      This  bond  is  issued  by 

the of  said under  the  provisions   of   chapter 

of  the  session  laws  of  the  seventeenth  general  assembly 

of  Iowa,  and  in  conformity  with  a  resolution  of  said 

da.ted day  of ,   18 In  testimony  whereof  the 

said has  caused  this  bond  to  be  signed  by 

L.  S.      the and  attested  by  the seal  attached 

this day  of 18 

(Coupon.} — The  treasurer  of ,   Iowa,  will  pay  to 

the  holder  hereof  on   the    day  of    ,    18 

, . .  dollars  for  interest  on bond  No ,  issued 


IOWA — REFUNDING    BONDS.  153 

under  provisions  of  chapter of  the  sessions  laws  of  the 

seventeenth  general  assembly. 

48.  Sale  of  Bonds: — The  treasurer  of  such  corporation 
may  sell  said  bonds  at  not  less  than  par,  and  apply  the  pro- 
ceeds to  the  redemption  of  the  outstanding  bonded  debt,  or  he 
may  exchange  such  bonds  for  outstanding  bonds  at  par.     The 
new  bonds  authorized  by  this  act  shall  be  issued  for  no  other 
purpose  than  the  refunding  of  such  outstanding  bonds,  except 
that  the  corporation  may  appropriate  not  to  exceed  two  per 
cent  thereof  to  pay  the  expenses  of  their  issue  and  sale. 

49.  Tax: — The  board  of  supervisors  or  common  council 
of  any  city  or   town  issuing  such  bonds   shall    cause    to  be 
assessed  and  levied  upon  the  taxable  property  thereof  in  addi- 
tion to  other  taxes,  a  sufficient  sum  to  pay  the  interest  on  such 
bonds  as  it  becomes  due,  and  such  proportion  of  the  principal 
that  at  the  end  of  eight  years  the  sum  raised  will  equal  at  least 
fifteen  per  cent  of  the  amount  of  bonds  issued;  at  the  end  of 
ten  years,  at  least  thirty  per  cent  bf  such  amount;  and  at  or 
before  maturity  of  the  bonds,  shall  be  equal  to  the  whole  amount 
of  principal  and  interest.     The  money  arising  from  such  tax 
shall  be  known  as  the  "  Bond  Fund,"  and  shall  be  kept  as  a 
special  account,  and  used  only  for  the  payment  of  such  bonds 
and  interest. 

50.  Redemption  of  Bonds : — The   redemption  of  bonds  is- 
sued under  the  provisions  of  this  act,  after  the  expiration  of 
five  years  may  be  made  in  substantially  the  same  manner  as 
provided  in  the  case  of  county  funding  bonds.1 

51.  Default  in   Payment: — In  case  of  a   failure  of  the 
proper  municipal  authorities  to  make  the  necessary  tax  levies 
to  meet  the  payment  of  such  bonds  as  they  become  due,  they 
may  be  filed  with  the  state  auditor  and  taxes  levied  for  their 
payment  by  the  state  authorities  in  the  same  manner  as  is  pro- 
vided in  the  case  of  county  funding  bonds.2     (293,  chap.  58, 
17  G.  A.,    as  amended  by  chap.  21,  20  G.  A.,  1884,  and  chap. 
14,  21  G.  A.,  1886.) 

1  See  \  13  herein.     2  See  \  14  herein. 


154  IO\VA — PROHIBITED   MUNICIPAL   AID. 

52.  Certain   Municipal   Indebtedness    Forbidden  : — 

No  county,  city  or  incorporated  town  shall  directly  or  indirectly 
subscribe  for  capital  stock  or  become  interested  in  any  bank, 
plank-road,  turnpike,  or  railway,  or  in  any  work  of  internal  im- 
provement, nor  shall  they  be  allowed  to  issue  any  bonds  or  other 
evidences  of  indebtedness  for  such  purpose;  but  this  provision 
shall  not  be  construed  as  to  prevent  such  municipalities  from 
erecting  their  necessary  public  buildings,  bridges,  or  laying  out 
highways,  streets,  alleys,  public  grounds  or  other  local  works 
in  which  they  may  be  respectively  interested.  Municipal  cor- 
porations are  prohibited  from  appropriating  or  loaning  public 
money  to  or  in  favor  of  any  school,  association,  or  object,  which 
is  under  ecclesiastical  or  sectarian  management  or  control. 

(552-553-) 

53.  Railroad  Aid   Bonds   Void : — All  bonds  or  other 
evidences  of  debt  hereafter  issued  by  any  municipal  corpora- 
tion to  any  railway  company's  capital  stock  shall  be  null  and 
void,  and   no  assignment  of  the  same  shall   give   them  any 
validity.     A  former  recovery  on  any  part  of  such  bonds  or 
coupons  shall  not  bar,  estop,  or  affect  any  defense  the  corpora- 
tion has  made  or  can  make  to  such  bonds  or  coupons.     (554- 
555-) 


CHAPTER  XIV. 


NEBRASKA. 


References  are  to  the   Compiled  Statutes  of  1887,   except  as  otherwise 

indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  in  force  November  ist,  1875. 

1.  State  Indebtedness: — To    meet    casual    deficits  or 
failures  in  the  revenues,  the  state  may   contract  debts,    not 
exceeding   in   the  aggregate   one  hundred   thousand  dollars, 
except  in  case  of  invasion,  insurrection  or  war,  and  provision 
shall  be  made,  by  an  irrepealable  law,  for  the  payment  of  the 
interest  on  such  debt,  annually,  as  it  shall  accrue,  by   a  tax 
levied  for  the  purpose,  or  from  other  sources  of  revenue.     The 
credit  of  the  state  shall  never  be  given  or  loaned  in  aid  of  any 
individual,    association   or   corporation.       (Art.     12,    sees,   i 
and  3.) 

2.  County  and  Municipal  Indebtedness  : — No    city, 
county,  town,  precinct,  municipality,  or  other  subdivision  of 
the  state,  shall  ever  make  donations  to  any  railroad  or  other 
works  of  internal   improvement,  unless  a  proposition    so    to 
do  shall  have  been  first  submitted   to  the  qualified  electors 
thereof;  and  such  donations  of  a  county  with  the  donations  of 
such  subdivisions  in  the  aggregate  shall  not  exceed  ten  per 
cent  of  the  assessed  valuation  of  such  county,  but  any  city  or 
county  may,  by  a  two-thirds  vote,  increase  such  indebtedness 
five  per  cent  in  addition  to  such  ten  per  cent,  and  no  bonds  or 
evidences  of  indebtedness  so  issued  shall  be  valid  unless  the 
same  shall  have  indorsed  thereon  a  certificate  signed  by  the 
secretary  and  auditor  of  state,  showing  that  the  same  is  issued 
pursuant  to  law.     (Art.  12,  sec.  2.) 

(155) 


156      NEBRASKA — CONSTITUTIONAL   PROVISIONS — COUNTIES. 

3.  Municipal  Subscriptions  : — No  city,  county,  town, 
precinct,  municipality,  or  other  subdivision  of  the  state,  shall 
ever  become  a  subscriber  to  the  capital  stock,  or  owner  of  such 
stock,  or  any  portion  or  interest  therein,  of  any  railroad  or 
private  corporation,  or  association.     (Art.    n,   Municipal  Cor- 
porations, sec.  i.) 

4.  Limit  on  Taxation  : — County  authorities  shall  never 
assess  taxes  the  aggregate  of  which  shall  exceed  one  and  a 
half  dollars  per  one  hundred  dollars  valuation,  unless  author- 
ized by  a  vote  of  the  people  of  the  county.     (Art.  9,  sec.  5.) 

5.  Special  Legislation  : — The  legislature  is  prohibited 
from  passing  local  or  special  laws  :      (among  other  things) 
granting  to  any  corporation,  association,   or  individual,   any 
special  or  exclusive  privileges,  immunity,  or  franchise  whatever, 
and  in  all  other  cases  where  a  general  law  can  be  made  appli- 
cable,no  special  law  shall  be  enacted.     (Art.  3,  sec.  15.) 

COUNTIES.1 

6.  County  Board  of  Supervisors : — In  counties  hav- 
ing a  township  organization,  the  county  board  is  composed  of 
the  supervisors  of  the  organized  townships,  and  of  the  cities 
and  villages  of  the  county.     They  are  required  to  hold  two 
regular  meetings  at  the  county  seat  each  year,  on  the  second 
Tuesday  in  January,  and  the  first  Tuesday  in  June.     Special 
meetings  shall  be  held  only  on  the  written  request  of  at  least 
one- third  of  the  members,  specifying  the  time  and  object  of  the 
meeting,  by  the  clerk  sending  a  written  notice  to  each  member 
of  the  board,  of  the  time  and  object  of  the  meeting,  and  also 
publishing  a  notice  in  some  newspaper  of  the  county,  if  any  is 
published  therein,  and  no  business  shall  be  transacted  at  any 
special  meeting  except  such  as  is  specified  in  the  call.     Two- 
thirds  of  the  supervisors  elected  in  any  county  constitute  a 
quorum. 

7.  County  Board    of   Commissioners  : — In    counties 
without  township  organization,  having  not  more  than  seventy 

1  Also  see    "  Internal    Improvement  Bonds,"    §60;  "  Compromise 
Bonds,"  $76;  "Registration,"  £80. 


NEBRASKA — COUNTY    BONDS.  157 

thousand  inhabitants,  the  county  board  consists  of  three  com- 
missioners, and  in  counties  having  more  than  seventy  thousand 
inhabitants,  of  five  commissioners.  Regular  sessions  of  said 
board  shall  be  held  on  the  second  Tuesday  in  January,  the 
third  Monday  in  June,  and  the  first  Tuesday  in  October  of  each 
year.  Special  sessions  may  be  called  by  the  county  clerk 
when  demanded  by  the  interests  of  the  county,  upon  giving 
five  days'  notice  of  the  time  and  object  of  such  meeting,  by 
posting  up  notices  in  three  public  places  in  the  county,  or  by 
publication  in  a  newspaper  published  therein.  The  county 
clerk  is  ex-officio  clerk  of  the  county  board.  (Chap.  18,  sees. 
20-74,  as  amended  by  chap.  29,  L,aws  of  1887.) 

8.  Bonds  for  County  Buildings  :— It  is  made  the  duty 
of  the  count}'  commissioners  to  erect  or  otherwise  provide  a 
suitable  courthouse  and  other  county  buildings,  and  for  that 
purpose  borrow  money  and  issue  bonds  of  the  county  there- 
for, but  no  appropriation  exceeding    fifteen  hundred  dollars 
shall  be  made  for  the  erection  of  any  county  buildings,  without 
first  submitting  the  proposition  to  a  vote  of  the  people  at  a 
general  election,  or  at  a  special  election  called  by  the  board  for 
that  purpose,  and  the  same  is  ordered  by  three-fifths  of  the 
legal  voters  voting  thereon.     (Chap.  18,  sec.  25,  as  amended  by 
chap.  28,  Laws  of  1887.) 

9.  Funding  Bonds : — Counties  are  authorized  to  issue 
funding  bonds  to  an  amount  not  exceeding  ten  per  cent  of  the 
assessed  valuation  of  the  county,  to  pay  outstanding  and  un- 
paid bonds,  warrants  and  other  county  indebtedness.     Such 
bonds  may  be  of  such  denomination  as  the  county  board  may 
deem  best,  payable  at  the  office  of  the  county  treasurer,   run- 
ning not  more  than  twenty  nor  less  than  five  years,  and  bear- 
ing not  to  exceed  seven  per  cent  semi-annual  interest.     The 
bonds  and  coupons  shall  be  signed  by  the  chairman  of  the 
board,  and  countersigned  by  the  county  clerk. 

10.  Question   Submitted: — The  county   board  shall  first 
submit  the  question  of  issuing  such  bonds  to  a  vote  of  the  quali- 
fied electors  of  the  county.     The  proposition  submitted  shall 
include  the  minimum  price,  not  less  than  par,  at  which  said 


158  NEBRASKA— COUNTY    BONDS. 

bonds  shall  be  sold.  Where  the  rate  of  interest  on  the  indebt- 
edness will  be  reduced  by  the  new  issue,  and  the  amount  of 
the  indebtedness  will  not  be  increased,  a  majority  of  the 
votes  cast  shall  be  sufficient  to  adopt  the  proposition.  The 
county  treasurer  shall  keep  a  detailed  record  of  all  bonds  is- 
sued, giving  the  number,  amount,  date  and  to  whom  issued. 

11.  Tax: — The  county  board  is  required  to  levy  a  tax 
annually,  sufficient  to  pay  the  interest  on  said  bonds,  as  it  be- 
comes due,  and  also  an  additional  amount  to  pay  the  principal 
at  maturity,  but  not  more  than  twenty  per  cent  of  such  princi- 
pal shall  be  levied  and  collected  in  any  one  year.     (Chap.  18, 
sees.  132-141.) 

12.  Refunding    Bonds  : — Any   county   in  this  state  is 
authorized  to  issue  its  coupon  bonds,  bearing  not  to  exceed  six 
per  cent  interest,  payable  semi-annually,  the  principal  pa)-able 
in  not  exceeding  twenty  years  from  date,  for  the  purpose  of 
refunding  its  bonded  indebtedness,  said  bonds  to  be  substitu- 
ted in  place  of,  and  exchanged  for,  bonds   heretofore  issued 
whenever  the  same  can  be  effected.     Such  bonds  may  be  is- 
sued even  if  said  indebtedness  exceeds  ten   per  cent   of  the 
county's  assessed  valuation,  and  without  submitting  the  ques- 
tion to  a  vote  of  the  electors. 

13.  Redemption : — In  all  cases  where  county  bonds  are 
past  due,  and  by  their  terms  payable  at  the  option  of  the  county 
board,  the  board  shall  notify  the  holders  to  present  the  same 
for  redemption  or  exchange  and  substitution,   and  in  case  of 
the  holders  failing  to  so  present  them  at  the  place  of  payment, 
the  county  shall  not  be  liable  to  pay  interest  on  such  bonds, 
commencing  with  the  next  due  coupon,  in  excess  of  the  inter- 
est provided  for  in  the  refunding  bonds. 

14.  Sale : — In  case  an  exchange  of  such  bonds  cannot  be 
effected,  the  county  commissioners  are  authorized  to  sell  said 
refunding  bonds,  at  not  less  than  par,  in  such  sums  as  may  be 
necessary  to  create  a  fund  for  the  redemption  of  the  said  out- 
standing bonds. 

15.  Registration  : — The  county  clerk  shall  certify  to  the 


NEBRASKA — COUNTY    BONDS.  159 

auditor  of  state  the  number,  amount  and  description  of  each 
bond  cancelled,  or  to  be  cancelled  and  refunded,  and  the 
amount  due  thereon  for  principal  or  unpaid  interest.  It  is  the 
duty  of  such  auditor  to  register  all  such  substituted  bonds,  but 
in  no  case  in  excess  of  the  amount  so  certified  to  him  by  the 
county  clerk,  and  the  secretary  of  state  and  said  auditor  shall 
certify  such  bonds,  and  a  tax  to  pay  the  principal  and  interest 
thereon  shall  be  levied  in  the  same  manner  as  in  case  of  other 
county  bonds.  The  bonds  shall  be  entitled  to  registration  in 
the  order  that  they  are  presented  to  the  auditor.  These  pro- 
visions as  to  registration  shall  apply  to  all  refunding  bonds 
already  or  hereafter  issued.  (Chap.  18,  sees.  141  a,  to  141  h, 
in  force  Feb.  28,  1883.) 

16.  Coal  Prospecting  : — On  presentation  of  a  petition  of 
twenty  resident  freeholders  of  the  county,  the  board  of  com- 
missioners of  any  county    in   this   state   are  authorized   and 
required  to  submit  to  the  legal  voters  a  proposition  to  issue 
bonds,  not  exceeding  twenty  thousand  dollars,  to  defray  the 
expenses  of  boring  and  prospecting  for  coal  in  such  county, 
under  the  direction  of  the  commissioners;  and  are  authorized 
to  issue  said  bonds  for  that  purpose  in  case  the  vote  shall  be 
favorable  to  the  proposition.     The  proceedings  relating  to  the 
issue  of  such  bonds  are  governed  by  the  act  relating  to  internal 
improvement  bonds     (See   sec.    60   herein).    The  counties  of 
Burt,  Washington  and  Sarpy  are  excepted  from  the  application 
of  this  act.     (Chap.  18,  art.  3,  sees,  i   and  2,  in  effect  March 

3,  1873.) 

17.  Submission  of  Questions  : — The  mode  of  submit- 
ting questions  to  the  people  for  any  authorized  purpose  shall  be 
as  follows:  The  whole  question,  including  the  sum  to  be  raised, 
or  the  amount  of  tax  to  be  levied,  or  the  rate  per  annum,  with 
the  time  of  its  taking  effect,  if  of  a*  nature  to  be  set  forth,  is  to 
be  published  for  four  weeks  in  some  newspaper  in  the  county, 
or  if  there  is  no  such  newspaper,  to  be  posted  up  in  at  least  one 
of  the  most  public  places  in  each  election  precinct.     The  notice 
shall  name  the  time  when  such  vote  shall  be  taken,  and  the 
form  of  the  question  submitted;    and  a  copy  of  the  question 


160  NEBRASKA — COUNTY    AND    CITY    BONDS. 

shall  be  posted  up  at  each  voting   place  during  the   day   of 
election. 

18.  When  the  submitted  question  involves  the  borrowing 
or  expenditure  of  money  or  issuance  of  bonds,  the  proposition 
must  be  accompanied  by  a  provision  to  levy  a  tax  annually  for 
the  payment  of  the  interest  thereon,  and  no  vote  adopting  the 
question  proposed  shall  be  valid,  unless  it  adopt  the  amount  of 
tax  to  be  levied  to  meet  the  liability  incurred.     If  it  appears 
that  two-thirds  of  the  votes  cast  are  in  favor  of  the  proposition, 
and  the  requirements  of  the  law  have  been  fully  complied  with, 
the  same  shall  be  entered  at  large  by  the  county  board  upon 
their  records.     Propositions  thus  acted  upon  cannot  be  rescinded 
by  the  county  board.     (Chap.  18,  sees.  27-30.) 

CITIES.' 

19.  Cities    Classified  : — All  cities  having  a  population 
of  sixty  thousand  or  more,  are  known  as  cities  of  the  metro- 
politan class;  all  those  having  a  population  of  less  than  sixty 
thousand  and  more  than  twenty-five  thousand,  are  known  as 
cities  of  the  first  class  having  less  than  sixty  thousand  inhabit- 
ants; and  all  cities,  towns  and  villages  containing  more  than 
one  thousand  and  less  than  twenty-five  thousand  inhabitants 
are  known  as  cities  of  the  second  class.     Cities  of  the  second 
class  having  more  than  five  thousand  inhabitants  are  governed 
by  special  statutory  provisions.     (Chap.    14,   arts,    i   and   2; 
L,aws  1887,  chaps.  10  and  u.) 

20.  Bonds  of  Metropolitan  Cities  : — The  mayor  and 
council  are  authorized  to  issue  the  coupon  bonds  of  the  city  for 
such  amounts  and  length  of  time  as  they  may  deem  proper, 
bearing  not  to  exceed  six  per  cent  interest,  for  the  construction 
and  maintenance  of  sewers,  the  renewal  of  outstanding   city 
bonds  bearing  a  higher  rate  of  interest,  the  funding  and  pay- 
ment of  the  city's  floating  indebtedness,  the  construction  of  a 
city  hall  or  other  needful  city  buildings,  or  for  the  appropria- 
tion of  gas-works,  water-works  or  land  for  public  parks.     All 
such  bonds  shall  express  upon  their  face  the  purpose  for  which 
they  are  issued.     Such  cities  are  authorized  to  provide  for  the 

1  Also  see  \\  60,  75,  77,  85. 


NEBRASKA — METROPOLITAN    CITIES.  l6l 

erection  of  market-houses  and  other  city  buildings  and  the 
establishing  and  maintaining  of  public  libraries;  and  to  estab- 
lish and  change  the  channels  of  streams  and  water-courses 
within  the  city,  and  bridge  the  same,  but  the  ordinance  providing 
for  any  such  improvement,  costing  in  the  aggregate  more  than 
twenty  thousand  dollars  shall  be  first  submitted  to  and  ratified 
by  a  majority  of  the  legal  voters  in  such  city  voting  thereon. 

21.  Limit  of  Amount — Vote — Sale: — The  city's  bonded 
indebtedness,  exclusive  of  district  paving  bonds,   and  curbing 
and  guttering  bonds,  shall  not  at  any  time  exceed  in  the  aggre- 
gate ten  per  cent  of  the  assessed  valuation   of  such  city.     No 
bonds  shall  be  issued,  except  for  renewal  bonds,  bonds  for 
paving,  gas-works,  water-works,  land  for  public  parks,  or  for 
curbing  and   guttering   purposes,   in  excess  of  two   hundred 
thousand  dollars  in  any  one  year,  nor  until  the  legal  electors  of 
said  city  shall  have  authorized  the  same  by  a  two-thirds  vote 
at  a  general  annual  or  special  election  of  said  city,  called  after 
twenty  days'  public  notice,  stating  distinctly  the  amount  and 
purpose  for  which  they  are  to  be  issued.     Such  bonds  shall  in 
no  case  be  sold  at  less  than  par. 

22.  District  Paving  Bonds: — The  mayor  and  council  of 
any  city  of  this  class  are  authorized  to  pave,  repave  or  macad- 
amize any  street  or  alley,  and  for  that  purpose  to  create  suit- 
able paving  districts.     Such  paving  shall  be  done  upon  the 
petition  of  the  owners  representing  a  majority  of  the  frontage 
of  the  lots    or    lands  abutting  on  the  street  or    alley   to  be 
improved,  and  shall  be  done  with  the  material  determined  upon 
by  such  majority  of  owners,  when  so  designated.     The  cost  of 
paving  shall  be  assessed  upon  the  lots  and  lands  abutting  on 
such  street  or  allej',  and  payable  in  installments  of  one-tenth 
each,  the  last  nine  of  which  being  payable  annually  in  from 
one  to  nine  years,  and  bearing  interest  at  the  rate  of  seven  per 
cent.     For  the  purpose  of  paving,  macadamizing  or  repaving 
the  streets  and  alleys  in  any  paving  district,  exclusive  of  inter- 
sections of  streets  and  spaces  opposite  alleys  therein,  the  mayor 
and  council  may,  by  ordinance,  issue  bonds  called   "  District 
Paving  Bonds  of  District  No , "  payable  within  ten  years 


1 62  NEBRASKA — METROPOLITAN    CITIES. 

from  date,  and  bearing  not  to  exceed  ten  per  cent  interest, 
payable  annually;  and  in  such  case  shall  also  provide  that  the 
special  assessments  shall  constitute  a  sinking  fund  for  the  pay- 
ment of  the  bonds  and  interest. 

23.  Paving  Bonds: — The  mayor  and  council,  for  the  pur- 
pose of  paying  the  cost  of  paving  the  intersections  of  streets 
and  spaces  opposite  alleys,  may  issue  city  bonds,  running  not 
more  than  twenty  years,  and  bearing  not  to  exceed  six  per  cent 
interest,  payable  semi-annually,  to  be  called  "  Paving  Bonds." 
The  issue  of  said  bonds  shall  first  be  authorized  by  a  two- 
thirds  vote  of  the  electors  of  such  city  voting  on  the  question 
at  a  general  or  a  special  election.     The  aggregate  amount  of 
such  bonds  issued  in  any  one  year  shall  not  exceed  one  hun- 
dred thousand  dollars. 

24.  Bonds  for  Curbing  and  Guttering: — For  the  purpose 
of  paying  the  cost   of  curbing  and  guttering   any  street   or 
avenue  in  which  paving  has  been  ordered,   city  bonds  may  be 
issued,  to  be  called  "  Curbing  and  Guttering  Bonds  of  Paving 
District  No. . . .,"  payable  in  the  same  manner,  for  the  same 
time  and  rate  of  interest  as  "  District  Paving  Bonds  "  as  above, 
the  assessment  for  such  curbing  and  guttering  being  made  in 
the  same  manner  as  for  paving.     Such  curbing  and  guttering 
shall  not  be  ordered  upon  any  street  not  ordered  to  be  paved, 
except  on  the  petition  of  a  majority  of  the  abutting  property 
holders. 

25.  Injunction  Prohibited: — No  court  or  judge  shall  grant 
an  injunction  to  restrain  the  levy,  enforcement  or  collection  of 
any  special  tax  or  assessment  to  pay  the  cost  of  any  of  the 
improvements  above  specified;    and  no  such  special  tax  shall 
be  declared  void,  nor   any  such    assessment  be  set  aside   on 
account  of  any  error  or  irregularity  in  the  proceedings  relating 
thereto,  but  parties  may  pay  such  assessment  under  protest, 
with  a  right  to  bring  an  action  against  the  city  for  the  repay- 
ment of  the  same. 

26.  Sale —  Taxes: — No  bonds  of  cities  of  this  class  must 
be  sold  at  less  than  par.     The  mayor  and  council  are  required 
to  make  provision  for  a  sinking  fund  to  redeem,  at  maturity. 


NEBRASKA — CITIES    OF   THE    FIRST    CLASS.  163 

the  bonded  indebtedness  of  such  cities,  and  also  to  provide  for 
the  payment  of  the  interest  thereon,  as  it  accrues,  and  for  that 
purpose,  to  levy  and  collect  a  tax,  not  exceeding  one  per  cent 
in  any  one  year,  upon  the  taxable  property  of  such  city.  (Chap. 
ID,  Laws  of  1887,  pp.  103-201.) 

27.  Bonds  of  Cities  of  the  First  Class: — Any  city  of 
the  first  class  may  provide  for  the  erection  of  market-houses  or 
places,    and    all   other  useful  and   necessary   city    buildings, 
and  may  establish,  change  and  bridge  channels,  streams  and 
water-courses  within  the  city.      But  the  order  providing  for 
any  such  improvement  requiring  an  outlay  in  the  aggregate  of 
more  than  $5,000,  shall  first  be  submitted  to  and  ratified  by  a 
majority  of  the  legal  voters  of  the  city  voting  thereon.     Such 
city  may  also  establish  and  maintain  public  libraries,  and  hold 
and  improve  public  grounds  and  parks  within  or  without  the 
limits  of  the  city,  and  purchase  and  hold  not  to  exceed  eighty 
acres  of  land  in  one  body  outside  of  the  city  limits  for  city 
purposes. 

28.  Funding  and  Refunding  Bonds  : — Cities  of  this  class 
are  authorized  by  ordinance  to  provide  for  issuing  bonds  for 
the  purpose  of  funding  their  outstanding  indebtedness.     Float- 
ing indebtedness  can  only  be  funded  by  authority  of  a  vote  of 
the  people,  but  the  maj^or  and  council  may  by  a  two-thirds 
vote  issue  bonds  to  pay  off  any  bonded  debt  at  a  not  higher 
rate  than  the  debt,  without  a  vote  of  the  people. 

29.  Bonds  for  Paving  and  for  Curbing  and  Guttering  : 
"  District  Paving  Bonds,"  "  Paving  Bonds  "  and  "  Curbing  and 
Guttering  Bonds,"  may  be  issued  substantially  in  the  same 
manner,  under  the  same  conditions,  restrictions  and  limitations 
as  similar  bonds  may  be  issued  by  cities  of  the  metropolitan 
class.      ' '  Paving  Bonds  ' '  are  required  to  be  authorized  by  only 
a  majorit)"  of  the  electors  voting  thereon,  instead  of  by  a  two- 
thirds  vote,  as  in  the  case  of  metropolitan  cities. 

30.  Bonds  for   Sewers  and    Water-works : — The   mayor 
and  council  are  authorized  to  issue  the  bonds  of  the  city,  in  the 
aggregate  not  exceeding  $100,000,  for  the  purpose  of  construct- 
ing, or  aiding  in  the  construction  of,  a  system  of  sewerage,  or 


164  NEBRASKA — CITIES   OP   THE    FIRST   CLASS. 

with  the  same  limitation,  for  the  purpose  of  constructing, 
maintaining  and  operating  a  system  of  water-works  for  such 
city.  The  issue  of  bonds  in  either  case  must  first  be  author- 
ized by  a  majority  vote  of  the  people  at  an  election  upon  the 
proposition,  submitted  in  the  manner  provided  for  by  law  for 
the  submission  of  propositions  to  aid  in  the  construction  of 
railroads  or  other  works  of  internal  improvement. 

31.  Before  submitting  such  proposition,  the  mayor  and 
council  shall  adopt  a  system  of  sewerage  or  water-works,  and 
procure  from  the  city  engineer  an  estimate  of  the  cost  thereof, 
and  of  the  cost  of  so  much  thereof  as  they  propose  to  construct, 
and  such  estimate  with  the  amount  proposed  to  be  borrowed, 
and  the  plans  of  such  system  shall  remain  in  the  hands  of  the 
city    clerk,  subject  to  public  inspection  during  the  pending  of 
such  proposition.     After  the  adoption  of  a  system,  no  other 
system  shall   be  adopted  unless  authorized  by  a  vote  of  the 
people.     When  authorized  by  a  vote,  bonds,  not  to  exceed  ten 
thousand  dollars  in  any  one  year,  may  be  issued  to  construct 
extensions  of  water- works. 

32.  Taxes : — When    any    such   sewer    or    water- works 
bonds  have  been  issued,  there  shall  thereafter  be  levied  annu- 
ally on  all  the  taxable  property  of  the  city,  a  tax  of  not  exceed- 
ing one  mill  for  every  $20,000  of  such  bonds  issued.      This 
tax  with  the  income  from  the  water- works,  shall  first  be  ap- 
plied to  the  maintenance  of  such  works  and  the  payment   of 
the  interest  on  the  bonds,  and  the  surplus  used  for  the  ex- 
tension of  such  system,  or  retained  as  a  sinking  fund  for  the 
payment  of  the  bonds  at  maturity. 

33.  Sale  and  Interest . — "No  bonds  issued  by  the  city  for 
any  purpose  except  paving,  district  bonds,  shall  draw  interest 
at  a  greater  rate  than  six1  per  cent  per  annum,  nor  sold  for 
less  than  par  or  face  value,  and  shall  be  redeemable  at  the 
option  of  the  city  at  any  time  after  five  years  from  their  date. ' ' 
(Chap,  ii,  I/aws  of  1887,  pp.  201  to  290.) 

34.  Bonds  of  Cities  of  the  Second  Class — Funding 

1  But  by  the  same  act  it  is  provided  that  "District  Paving''  and 
"  Curbing  and  Guttering  Bonds"  may  bear  seven  per  cent. 


NEBRASKA — CITIES    OF    THE   SECOND    CLASS.  165 

Bonds  : — Cities  of  this  class  are  authorized  to  enact  ordinances 
for  the  issue  of  bonds  in  place  of,  or  to  supply  means  to  meet 
its  maturing'  bonds,  or  for  the  consolidation  or  funding  of  the 
same.  (Chap.  14,  sec.  9.) 

35.  Same: — Any  such  city,  for  the  purpose  of  funding  its 
indebtedness,  may  issue  bonds  payable  in  not  less  than  ten 
nor  more  than  twenty  years,  and  bearing  interest  at  a  rate  not 
to  exceed  seven  per  cent,  payable  annually  or  semi-annually. 

36.  Authority: — The    city    council    shall  authorize   the 
issue  of  such  bonds  by  ordinance  when  so  instructed  by  two- 
thirds  of  all  the  votes  cast  at  an  election  held  therein  for  that 
purpose.     Notice  of  said  election  shall  be  given  in  four  issues 
of  some  weekly  paper  published  in  such  city.      (Chap.  14,  sec. 
119,  in  force  Feb.  28,    1881.) 

37.  Refunding  Bonds: — Any  city  of  the  second  class,  for 
the  purpose  of  refunding  outstanding  bonds  bearing  ten  per 
cent  interest,  heretofore  issued  to  aid  in  the  construction  of  any 
railroad  or  other  work  of  internal  improvement,  is  authorized 
to  issue  coupon  bonds  bearing  not  to  exceed  seven  per  cent,  to 
be  substituted  in  place  of,  and  exchanged  for  such  bonds  here- 
tofore issued,  whenever  the  same  can   be   effected   at   not   to 
exceed  dollar  for  dollar.     Such  substitution  and  exchange  shall 
first  be  authorized  by  a  majority  vote  of  the  people,  as  in  the 
case  of  funding  bonds. 

38.  Form  of  Bonds: — Said  refunding  bonds  shall    have 
recited  therein  the  object  of  their  issue,  the  section  of  the  act 
under  which  the  issue  was  made,  stating  the  issue  to  be  in 
pursuance  thereof,  and  shall  also  state  the  number,  date  and 
amount  of  the  bonds  for  which  substituted,  and  such  new  bonds 
shall  not  be  delivered  until  the  surrender  of  the  bond  or  bonds 
so  designated.    (Chap.  14,  sees.  120—121,  in  force  Feb.  28,  1881.) 

39.  Bonds   for    Water-works  : — Cities  of  the  second 
class,  and  villages,  are  authorized  to  provide  for  the  purchase 
of  steam  engines,  and  for  a  water  supply  for  the  use  of  such 
city  or  village,  by  the  purchase,  erection  or  construction  of  a 
system  of  water-works,  and  to  borrow  money  and    to    issue 


1 66  NEBRASKA — CITIES    OF    THE   SECOND    CLASS. 

bonds  therefor.  Contracts  for  the  erection  or  coiibtruction  of 
any  such  works  shall  be  let  to  the  lowest  responsible  bidder, 
upon  not  less  than  twenty  days'  publication  of  the  terms  and 
conditions  thereof. 

40.  Authority — Form — Amount: — No  such   money  shall 
be  borrowed,  or  bonds  issued,  unless  the  same  has  been  author- 
ized  by  a  vote  of  a   majority  of  the  electors  of  the  city  or 
village  to  that  effect.     Said  bonds  shall   be  called     "Water 
Bonds,"  and  shall  become  due  in  twenty  years  from  date,  but 
payable  at  any  time  after  five  years,  bearing  seven  per  cent 
interest,  payable  annually,  and  shall  not  be  issued  to  a  greater 
amount  than  one  hundred  thousand  dollars. 

41.  Tax: — Such  cities  and  villages  are  authorized    for 
general  revenue  purposes  to  levy  a  tax  not  to  exceed  ten  mills 
on  the  dollar  in  any  one  year  on  all  of  the  taxable  property 
thereof,  and  in  addition  thereto  to  levy  a  tax  of  not  to  exceed 
seven  mills  on  the  dollar,  to  be  retained  in  a  fund  known  as 
the    "Water    Fund."     (Sec.    69,    chap.    14,   as  amended  by 
chap.  12,  Laws  of  1887.) 

42.  Cities  of  the  Second    Class    Having  Over  5,000 
Inhabitants — Funding    Bonds: — Cities    of   this    class,  when 
authorized  by  a  vote,  may  provide  for  issuing  bonds  for  the  pur- 
pose of  funding  any  city  indebtedness.     (Chap.  14,  art.  2,  sec. 
52,  subn.  53.) 

43.  Bonds  for  Sewers  and   Water-works: — Cities  of  this 
class  are  authorized  to  issue  bonds  for  sewers  and  water-works 
substantially  in  the  same  manner  and  under  the  same  condi- 
tions as  cities  of  the  first  class.1     After  the  adoption  of  a  sys- 
tem no  change  shall  be  made  therein  involving  an  expense  of 
more  than  five  hundred  dollars,  nor  shall  any  other  system  be 
adopted,  unless  authorized  by  a  vote  of  the  people.     (Chap. 
14,  art.  2,  sees.  66-68. ) 

44.  Bonds  for  Paving  and  for  Curbing  and  Guttering: — 
"Paving  Bonds,"   "  District  Paving  Bonds,"  and    "Curbing 
and  Guttering  Bonds, ' '  may  be  issued  by  cities  of  this  class. 
The  provisions  relating  to  the   issue  of  such  bonds,  special 

1  See  \  30  herein. 


NKBH  ASK  A  —  SCHOOL    BONDS.  167 

assessment,   etc.,    are  substantially  the  same  as  those  under 
cities  of  the  first  class.1  (Laws  of  1887,  chap.  14.) 

45.  Interest — Sale — Redemption: — No    bonds    issued    by 
cities  of  this  class   for  any  purpose  shall  draw  interest  at  a 
greater  rate  than  six  per  cent  per  annum,  nor  sold  for  less  than 
par,  and  shall  be  redeemable  at  the  option  of  the  city  at  any 
time  after  five  years  from  their  date."     (Chap.  14,  art.  2,  sees. 
70  and  71.) 

SCHOOL  BONDS. 

46.  School   District    Bonds: — School    districts,     through 
their  proper  officers,  are  authorized  to  issue  bonds  for  the  pur- 
pose of  purchasing  school  sites,  and  the  building  and  furnish- 
ing of  schoolhouses.     No  such  bonds  shall  be  issued  unless  the 
question  has  been  submitted  to  and  authorized  by  two-thirds 
of  all  the  qualified  electors  voting  thereon  at  an  election  for  that 
purpose,  upon  a  notice  given  by  the  officers  at  least  twenty 
days  prior  thereto.     Such  vote  shall  not  be  ordered  unless  a 
petition  signed  by  at  least  one-third  of  the  qualified  voters  of 
the  district  is  presented  to  the  district  board,  suggesting  that 
a  vote  be  taken. 

47.  Limitation  of  Amount: — No  district  shall  issue  bonds 
unless  there  are  at  least  twelve  children  of  school  age  residing 
therein,  and,  except   in   districts  having   two   hundred   such 
school  children,  the  aggregate  amount  of  bonds  shall  not  exceed 
five  per  cent  of  the  taxable  property  of  the  district,  as  shown 
by  the  last  assessment  thereof.     Also  in  districts  having  less 
than  twenty-five  scholars,  such  bonds  shall  not  exceed  five  hun- 
dred dollars;  in  those  having  twenty-five  and  less  than  fifty,  one 
thousand  dollars;  those  having  fifty  and  less  than  one  hundred, 
two  thousand  dollars;  and  those  having  one  hundred,  but  less 
than  two  hundred,  five  thousand  dollars,  and  in  districts  hav- 
ing two  hundred  or  more  such  school  children,  any  amount  not 
to  exceed  ten  per  cent  of  the  assessed  valuation  thereof. 

1  See  $  29  herein. 

2  But  this  limitation,  at  least  as  to  interest,  appears  to  have  been 
modified  in  the  case  of  bonds  for  sewerage  and  water-works,  and  for 
paving,  and  curbing  and  guttering  under  amendments  in   1887,  herein- 
before shown. 


1 68  NEBRASKA — SCHOOL  BONDS. 

48.  Form  of  Bonds : — Such  bonds  shall  specif}-  on  their 
face  the  date,  amount,  for  what  purpose  issued,  the  time  to  run, 
and  rate  of  interest,  not  exceeding  seven  per  cent.     The  bonds 
and  the  interest  coupons  thereto  attached  shall  be  signed  by 
the  director,  moderator  and  treasurer  of  the  district  board. 

49.  Registration  : — The  proper  officers  of  the  school  dis- 
trict in  which  any  bonds  may  be  voted,  under  any  law  of  this 
state,  are  required  before  the  issuance  of  such  bonds,  to  make 
a  written  statement  under  oath  of  all  the  proceedings  relative 
to  the  vote,  notice  of  election,  how  made,  questions  of  submis- 
sion, and  result  of  the  vote,  together  with  a  full  statement  of 
assessed  valuation,  number  of  children  of  school  age,  and  the 
total  bonded  indebtedness  of  such  district,  and  transmit  such 
statement,  with  the  bonds,  to  the  auditor  of  public  accounts. 
The  auditor,  upon  examination  of  such  statement  and  bonds, 
if  he  is  satisfied  that  said  bonds  have  been  voted  in  conformity 
to  law  and  are  in  all  respects  in  due  form,  shall  record  the 
statement  and  register  the  bonds  in  his  office.     No  bonds  shall 
be  issued  or  be  valid  unless  they  shall  be  so  registered  and 
have  indorsed  thereon  a  certificate  by  the  said  auditor  and  sec- 
retary of  state,  showing  that  they  are  issued  pursuant  to  law. 

50.  Tax: — Upon    the    registration  of    such   bonds,    the 
auditor  shall  certify  that  fact  to  the  clerk  of  the   county  in 
which  the  district  is  located,  and  also  to  the  officers   of  the 
district,  who  are  required  to  enter  the  same  upon  the  records 
of  such  district,  and  taxes  for  the  payment  thereof  and  the 
interest  thereon  shall  be  levied  by  the  board  of  county  commis- 
sioners, upon  all  of  the  taxable  property  of  such  school  dis- 
trict.    (Chap.  79,  subn.  16,  as  amended  by  chaps.  75  and  76, 
Laws  of  1887. 

51.  School    District    Refunding  Bonds: — School  dis- 
tricts which  have  heretofore  issued  bonds  bearing  ten  per  cent 
interest,  are  authorized  to  issue  coupon  bonds  bearing  not  to 
exceed  seven  per  cent  interest,    to  be  substituted  in  the  place 
of  and  exchanged  for  such  outstanding  bonds,  when  the  same 
can  be  effected,  at  a.  rate  not  to  exceed  dollar  for  dollar.     The 


NEBRASKA — SCHOOL    BONDS.  169 

ne\v  bonds  shall  recite  therein  the  object  of  the  issue,  the  title 
of  the  act  under  which  the  same  was  made,  stating  the  issue  to 
be  in  pursuance  thereof,  and  also  the  number,  date  and  amount 
of  the  bond  or  bonds  for  which  substituted,  and  shall  not  be 
delivered  until  the  surrender  of  said  old  bonds.  The  issue  of 
such  newr  bonds  shall  not  require  a  vote  to  authorize  the  same. 

52.  High  School    Redemption    Bonds  : — School    dis- 
tricts in  cities  of  the  first  class,  may,  without  a  vote  of  the 
people,   issue  coupon  bonds  to  an  amount  equal  to  the  out- 
standing and  unpaid  bonds,  bearing  ten  per  cent  interest,  here- 
tofore issued  for  the  purpose  of  erecting  a  high  school  build- 
ing.    Said  bonds  shall  be  payable  in  the  city  of  New  York  in 
not  more  than  twenty  nor   less  than  five  years,  with  interest 
not  to  exceed  seven  per  cent,  payable  semi-annually,  and  signed 
by  the  president  of  the  board  of  education,  and  countersigned 
by  the  secretary.    (Chap,  79,  subn.  15,  in  effect  Feb.  26,  1879.) 

53.  City  School  District : — Each  incorporated  city  hav- 
ing a  population  of  more  than   1,500  inhabitants,   including 
such  adjacent  territory  as  may  be  attached  for  school  purposes, 
constitutes  a  school  district,  and  is  a  body  corporate,  and  gov- 
erned by  a  board  of  education  consisting  of  six  elected  mem- 
bers, except  in  cities  of  the  first  class,  such  board  shall  consist 
of  nine  members.     The  majority  of  members  constitute  a  quo- 
rum for  the  transaction  of  business  at  board  meetings. 

54.  Expenditures : — In  case  the  purchase  of  school  sites 
and  the  erection  of  buildings  require  an  expenditure  exceeding 
five  thousand  dollars  for  any  one  year,  the  question  shall  be 
submitted  to  a  vote  of  the  electors  at  the  time  and  place  of 
any  city,  county  or  state  election.      The  board  of  education 
previous  to  such  election  shall  designate,  in  at  least  one  daily 
paper  published  in  the  district,  the  locality  of  the  site  and  cost 
of  building  to  be  erected. 

55.  Funding  School  Bonds  : — Upon  the  surrender  of 
any  bonds  issued  by  school  districts  or  other  school  organi- 
zations superseded  by  such  city  districts,  at  the  request  of  the 
holders  thereof,  the  board  of  education  is  required  to  issue  other 


IJO  NEBRASKA — SCHOOL    BONDS. 

bonds  of  like  amount,  and  of  the  same  tenor  and  effect,  as  to 
payment  of  principal  and  interest,  as  the  surrendered  bonds. 
In  case  the  new  district  embraces  only  a  part  of  the  former  dis- 
trict, such  new  district  shall  assume  and  pay  only  such  pro- 
portion of  the  former  district's  debt  as  the  assessed  valuation  of 
the  new  district  bears  to  the  remaining  part  of  the  old  district. 

56.  Limitation  of  Taxation  : — The  aggregate  school  tax 
shall  in  no  one  year  exceed  two  per  cent  upon  all  of  the 
taxable  property  of  the  district.     The  board  of  education  are 
required  to  provide  for  the  interest  on  all  bonds  issued  for  the 
district,  and  shall  also  immediately  after  the  expiration  of  one- 
half  of  the  time  for  which  said  bonds  are  issued,  set  apart  each 
year  for  a  sinking  fund  an  amount  sufficient  to  pay  the  principal 
thereof  as  the  same  matures.     (Chap.  79,  subn.  14.) 

57.  School  Bonds  in  Metropolitan  Cities  : — Each  met- 
ropolitan city  constitutes    a  school  district  with  a  board  of 
education  of  fifteen  elected  members.     This  board  may  borrow 
money  and  issue  bonds,   running  not  to  exceed  thirty  years, 
bearing  not  to  exceed  six  per  cent  interest,  payable  annually 
or  semi-annually ,    and     payable   at   such   places   as   may   be 
designated  therein;  said  bonds  shall  not  be  issued  in  sums  of 
less  than  fifty  dollars,  and  shall  express  on  their  face  the  act 
under  the  provisions  of  which  they  are  issued,  shall  be  signed 
by  the  president  and  secretary  of  the  board,  and  shall  be  of- 
fered in  open  market,  and  shall  be  sold  to  the  highest  bidder 
for  not  less  than  par. 

58.  Authority — Tax  : — No  bonds  shall  be  issued  nor  the 
question  be  submitted  without  the  consent   of  two-thirds   of 
the  board  of  education,  and  such  issue  must  be  authorized  by  a 
majority  of  the  electors  voting  thereon,  at  a  regular  election  or 
a  special  election  called  for  that  purpose,  after  at  least  ten  days' 
notice,   stating  the  amount,  published  in  one  or  more  daily 
papers  in  such  district.     The  board  is  required  to  provide  by 
taxation  for  the  payment  of  the  interest  and  principal  of  such 
bonds,  substantially  in  the  same  manner  and  with  the  same 
limitation  as  in  other  cities. 


NEBRASKA— INTERNAL    IMPROVEMENT    BONDS.  IJl 

59.  Metropolitan  City  School   Refunding  Bonds  :— 
Metropolitan  city  school  districts  are  authorized  to  issue  bonds 
in  exchange  for  bonds  of  former  districts,  or  parts  thereof,  in 
the  same  manner  as  provided  above  for  other  cities.     ( Chap. 
77,  I^aws  of  1887,  in  force  March  31,  1887.) 

INTERNAL  IMPROVEMENT  BONDS 

60.  County   or   City  Bonds    for    Internal    Improve- 
ments : — Any  county  or  city,  when  authorized  as  hereinafter 
provided,  may  issue  bonds  to  aid  in  the  construction  of  any 
railroad  or  other  work  of  internal  improvement,  to  an  amount 
to  be  determined  by  the  county  commissioners  or  city  council, 
not  exceeding  ten  per  cent  of  the  assessed  valuation  of  all  the 
taxable  property  thereof. 

61.  Proposition  Submitted: — The  question  of  issuing  such 
bonds  must  first  be  submitted  to  the  legal  voters  of  said  county 
or  city,  in  the  manner  provided  for  submitting  questions  of 
borrowing  money  to  the  voters  of  the  county.     The  proposi- 
tion must  include  the  rate  of  interest  the  bonds  are  to  draw, 
when  the  principal  and  interest  shall  be  made  payable,  and 
shall  be  accompanied  by  a  provision  to  levy  a  tax  annually  for 
the  payment  of  the  interest  on  the  bonds  as  it  becomes  due; 
and  also  an  additional  amount  shall  be  levied  and  collected  to 
pay  the  principal  of  such  bonds  as  they  mature. 

62.  Result: — If  two-thirds  of  the  votes  cast  at  such  elec- 
tion are  in   favor  of   the  proposition  submitted,  the  county 
commissioners,  or  city  council,  as  the  case  may  be,  shall  cause 
the  proposition  and  result  to  be  entered  upon  their  records,  and 
a  notice  of  its  adoption  to  be  published  for  two  successive  weeks 
in  any  newspaper  published  therein,  if  there  be  one,  and  shall 
thereupon  issue  said  bonds,  as  proposed. 

63.  Tax: — It  is  made  the  duty  of  the  proper  officers  of 
such  county  or  city  to  cause  to  be  annually  levied,  collected 
and  paid  to  the  holders  of  such  bonds,  a  special  tax  on  all  the 
taxable  property  thereof,  sufficient  to  pay  the  interest  as  it 
accrues,  and  the  principal  of  said  bonds  as  they  become  due, 


iy2  NEBRASKA — INTERNAL    IMPROVEMENT    BONDS. 

but  not  more  than  ten  per  cent  of  such  principal  shall  be  col- 
lected in  any  one  year. 

64.  Municipal  Obligation — Estoppel: — The  bonds  so  issued 
shall  constitute  a  subsisting  debt  against  such  county  or  city, 
until  they  are  paid  and  discharged.     Any  county  or  city  issu- 
ing its  bonds  in  pursuance  of  this  act  shall  be  estopped  from 
pleading  want  of  consideration  therefor,  and  the  proper  officers 
thereof  may  be  compelled  by  mandamus,  or  otherwise,  to  levy 
the  tax  as  provided  to  pay  the  same.     (Chap.  45,  sees,  i  to  6.) 

65.  Railroad  Aid — Bogus  Surveys: — No  proposition  shall 
be  submitted   to  the   electors  of  any  county  for  donation  of 
bonds  or  other  valuables  to  any  railroad  corporation,  unless 
said  corporation,  through  its  authorized  and  responsible  agent, 
files  for  record  in  the  office  of  the  county  clerk  of  such  county, 
a  plat  of  the  survey,  showing  their  exact  line  of  route  through 
said  county,  within  at  least  two  weeks  previous  to  such  elec- 
tion; and  no  bonds,  etc.,  shall  be  valid,  in  case  they  are  voted, 
unless  said  railroad  corporation  build  their  line  of  road  within 
forty  rods  of  such  survey,  as  filed.     (Chap.  72,  art.  3,   sec.    i, 
passed  in  1879.) 

66.  Refunding  Internal  Improvement  Bonds  : — Any 

county,  city  or  precinct  which  has  heretofore  voted  and  issued 
bonds  to  aid  in  the  construction  of  any  railroad  or  other  work 
of  internal  improvement,  which  bonds  are  a  legal  outstanding 
liability,  and  bear  interest  at  a  greater  rate  than  seven  per  cent, 
are  authorized  to  issue  coupon  bonds,  bearing  interest  not  to 
exceed  seven  per  cent,  to  be  substituted  or  exchanged  for  such 
outstanding  bonds,  when  the  same  can  be  effected  dollar  for 
dollar. 

67.  No  Vote  Necessary — Notice  Published : — The   issue  of 
such  new  bonds  shall  not  require  a  vote  of  the  people,  but  they 
shall  not  be  issued  except  after  four  publications  of  a  notice 
thereof  in  at  least  two  weekly   papers  in  the  county;  which 
notice  shall  recite  the  date,  number,  and  denomination  of  the 
bonds  sought  to  be  refunded,  and  also  of  the  bonds  sought  to 
be  issued. 


NEBRASKA — INTERNAL  IMPROVEMENT  BONDS.          173 

68.  Form  of  New  Bonds  : — Each  one  of  the  new  bonds  so 
issued  shall  recite  the  object  of  the  issue,  the  whole  of  the  act 
under  which  the  issue  is  made,  stating  the  issue  to  be  in  pur- 
suance  thereof,   and  shall    also   state  the  number,    date   and 
amount  of  the  bond  or  bonds  for  which  the  same  are  issued, 
and  such  new  bonds  shall  not  be  delivered  until  the  surrender 
of  the  bond  or  bonds  so  designated.     (Chap.  45,  sees,  n  to  13.) 

PRECINCT,  TOWNSHIP  AND  VILLAGE  BONDS.' 

69.  Purposes  for  which  may  be   Issued: — Any   precinct2, 
city  or  village  (less  than  a  city  of  the  second  class),  organized 
according  to  law,  is  authorized  to  issue  bonds  in  aid  of  works 
of  internal  improvement,  highways,  bridges,  railroads,  court- 
houses, jails  in  any  part  of  the  county,  and  the  drainage  of 
swamp  and  wet  lands,  to  an  extent  not  exceeding  ten  per  cent 
of  the  assessed  value  of  the  taxable  property  thereof,  as  shown 
by  the  last  assessment. 

70.  Petition  Required : — A   petition,    signed  by   not  less 
than  fifty  freeholders  of  the  precinct,  township  or  village,  shall 
be  presented  to  the  county  commissioners,  or  other  authorized 
board    having  charge  of  the  business  of  the  county   within 
which  the  precinct,    township,  or   village  is   located,   setting 
forth  the  nature  of  the  work  contemplated,  the  amount  of  bonds 
sought  to  be  voted,  the  rate  of  interest,  not  exceeding  eight 
per  cent,  the  date  when  the  principal  and  interest  shall  become 
due3.     The  petitioners  are  required  to  furnish  a  satisfactory 
bond  to  the  county  commissioners  for  the  payment  of  the  ex- 
penses of  an  election,  in  case  the  submitted  proposition  should 
not  be  adopted. 

71.  Question  Submitted: — Thereupon    the   county   com- 

1  See  \\  86,  85,  89,  90,  etc.,  for  registration,  also  see  \\  75, ,87;  etc. 

2  Where  bonds  are  executed  and  issued  by  county  commissioners  in 
behalf  of  a  precinct,  a  suit  thereon  is  properly  brought  against  the  coun- 
ty.   The  bonds  are  obligations  of  the  county,  although  they  are  to  be 
paid  by  taxes  against  the  precinct.     Davenport  v.  Dodge  Co.,  105  U.  S., 
237  (1882);  Blair  v.  Cuming,  in  U.  S.,  237  (1884);  Co.  of  Nemaha,  120  U. 
S.,  41  ( 1887). 

3  An  election  held  without  the  required  petition  is  of  no  validity. 
The  petition  is  a  necessary  condition.     State  v.  Babcock,  21  Neb.,  187 
(1887). 


174  NEBRASKA — INTERNAL    IMPROVEMENT    BONDS. 

raissioners  shall  give  notice  of  an  election  in  the  precinct,  town- 
ship or  village,  as  the  case  may  be,  in  the  manner  provided  for 
elections  for  voting  on  county  bonds.  If  two-thirds  of  the 
votes  cast  at  such  election  shall  be  in  favor  of  the  proposition, 
the  county  commissioners  are  required  forthwith  to  cause  to  be 
prepared  and  issue  bonds  in  accordance  with  the  petition  and 
notice  of  election.1 

72.  Form  and  Execution  of  Bonds  : — Said  bond  shall  be 
signed  by  the  chairman  of  the  board,  or  person  authorized  to 
sign  county  bonds,  and  attested  by  the  clerk  of  the  county 
under  the  county  seal,  and  shall  state  for  what  purpose  they 
are  issued,  the  amount  and  when  payable,  interest,  and  when 
payable,  and  the  number  of  each  bond. 

73.  Registry  by    Clerk : — The   county  clerk   shall    enter 
upon  the  records  of  the  board,  the  petition,  bond,  notice  and 
call  for  the  election,   canvass  of  vote,  the  number,   amount, 
interest  and  date  at  which  each  bond  issued  shall  become  pay- 
able, and  he  shall  also  cause  such  bonds  to  be  registered  in  the 
office  of  the  secretary  of  state   and  state  auditor,  as  required 
by  law. 

74.  Tax: — The  county  commissioners   or   other   proper 
authorities  shall  each  year,  until  the  bonds  so   issued  are  fully 
paid,  levy  upon  the  taxable  property  of  such  precinct,  town- 
ship or  village,  a  tax  sufficient  to  pay  the  interest,  and  five 
per  cent  of  the  principal   of  said  bonds,  and  at  the  tax  levy 
preceding  the  maturity  of  any  such  bonds,  an    amount  suf- 
ficient to  pay  the  principal  and  interest  thus  becoming  due. 
(Chap.    45,  sees.  14  to  17.) 

75.  Compromise  Bonds  : — Whenever  the  county  com- 
missioners of  any  county,  the  city  council  of  any  city,  the 
board  of  trustees  of  any  village,  or  the  school  board  of  any 
school  district,  shall  be  satisfied  by  petition  or  otherwise  that  any 
such  county,  precinct,  township,  or  town,  city,  village  or  school 
district  is  unable  to  pay  in  full  its  indebtedness,  and  two-thirds 

1  A  provision  providing  for  the  levy  of  the  necessary  amount  of  tax 
to  meet  the  liability  incurred  must  be  included  in  the  proposition 
adopted  in  order  to  make  the  bonds  valid.  21  Neb.,  599. 


NEBRASKA — COMPROMISE    BONDS—  FISCAL    AGENCY.       175 

of  the  resident  tax-payers  thereof  shall,  by  petition,  so  ask,  the 
proper  authorities  are  authorized  to  negotiate  with  the  holders 
of  such  indebtedness  for  the  compromise  thereof,  and  upon 
petition  of  two-thirds  of  the  resident  tax-payers,  as  above,  to 
issue  the  bonds  of  their  respective  municipalities  to  the  holders 
of  such  outstanding  indebtedness  for  an  amount  agreed  upon, 
not  exceeding  the  original  indebtedness,  upon  the  surrender  of 
such  original  indebtedness. 

76.  Record   and   Form   of  Bonds : — Before   issuing   said 
bonds,  the  board  or  other  authorities  issuing  the  same  shall 
enter  upon  its  records  a  resolution   reciting  the  number  and 
denomination  of  the  bonds  to  be  issued,  the  rate  of   interest, 
and  to  whom  and  when  payable.    Said  bonds  shall  be  payable  in 
not  more  than  twenty  years,  or  at  any  time  before  maturity,  at 
the  option  of  the  municipality,  and  shall  bear  interest  at  a  rate 
not  exceeding  seven  per  cent,  nor  the  rate  of   the  bond  sur- 
rendered, with  interest  coupons  attached  payable  annually  or 
semi-annually.     The  authorities  issuing  such  bonds  shall  keep 
a  complete  record  of  all  transactions  connected  therewith,  and 
may  levy  a  tax  to  pay  the  interest  and  principal  thereof  as  the 
same  shall  mature.     (Chap.  9,  Laws  of  1887,  in  force  March 
30,  1887.) 

77.  State  Fiscal  Agency  : — The  governor  is  authorized 
to  designate  some  bank  in  the  state  of  New  York  as  the  state 
agency  for  the  payment  of  bonds  and  coupons   issued  by  the 
state,  or  any  county,  township,  precinct,  city  or  school  district, 
which  are  by  their  terms  made  payable  in  said  city.     All  bonds 
and  coupons,  and  all  such  bonds  which  are  by  their  terms  pay- 
able at  any  particular  bank  in  said  city,  shall  be  paid  at  such 
agency.     (Chap.  9,  sees,  i  to  5. ) 

78.  Payment  of  Bonds : — The  state  treasurer,  or  other 
officers,  are  required  to  remit  to  the  state  agency  at  least  ten 
days  before  the  maturity  of  any  bonds  or  coupons  payable  in 
New  York,  sufficient  moneys  out  of  the  taxes  collected  for  the 
purpose,  for  the  redemption  of  such  bonds  and  coupons,  and  in 
addition,  a  commission  not  exceeding  one-eighth  of  one  per 
cent  allowed  for  charges  and  expenses,  and  on  the  payment  of 


176  NEBRASKA — REGISTRATION    OK    BONDS. 

any  bonds  or  coupons,  such  agency  is  required  to  return  the 
same  cancelled  to  the  officer  from  whom  the  funds  for  such 
payment  were  received.  (Chap.  9,  sees,  i  to  5.) 

REGISTRATION  OP  BONDS. 

79.  Registration  of  County   Bonds  : — The  officers  of 
any  county  issuing  bonds  shall  make  registration  in  a  book 
kept  for  that  purpose,  of  the  notice  of  election,  manner  and 
time  of  publication,  questions  of  submission  and  adoption  of 
the  proposition  on  account  of  which  such  bonds  were  issued, 
also  of  the  date,  amount,  number,  maturity,  when  payable  and 
where  payable,  and  the  rate  of  interest,  and  when  and  where 
payable,  of  such  bonds;  and  shall,  at  the  time  of   issuing  the 
same,  make  out  and  transmit  to  the  auditor  of  the  state  a  cer- 
tified statement  of  such  registry,  which  shall  be  attested  by  the 
county  clerk  under   his   official   seal.      Then   the  auditor  of 
state,  upon  receipt  of  such  statement,  shall,  in  a  book  kept  by 
him  for  that  purpose,   make  a  faithful  record  of  the  same. 
(Chap.  9,  sec.  10.) 

80.  Statement   of  Bonded   Indebtedness  : — It  shall  be  the 
duty  of  the  clerk  of  each  county  in  this  state,  at  such  times  as 
the  auditor  of  state   may   request,  to  make  out,  certify,  and 
transmit  to  such  auditor  a  full  and  complete  statement  of  the 
bonded  indebtedness  of  every  description  of  such  county,  at 
the  date  of  such  statement,  particularly  setting  forth  the  nature 
of  such  bonds,  and  for  what  the  same  were  issued,  which  shall 
be   entered   of   record   by   the   auditor  of  state  in   the  same 
manner.     (Id.,  sec.  n.) 

81 .  Registration  on  Presentation  of  Holder : — Whenever 
the  holder   of   county  bonds   shall   present  the   same  to  the 
auditor  of  state  for  registration,  the  auditor,  upon  being  satis- 
fied that  such  bonds  have  been  issued  according  to  law,  shall 
register  the  same  in  his  office  in  a  book  to  be  kept  for  that  pur- 
pose, in  the  same  manner  that  such  bonds  are  registered  by  the 
officers  issuing  the  same,  and  shall,  under  his  seal  of  office, 
certify  upon  such  bonds  the  fact  that  they  have  been  regularly 
and  legally  issued,  and  that  such  bonds  have  been  registered  in 


NEBRASKA — REGISTRATION    AND    PAYMENT    OF    BONDS.       177 

his  office  in  accordance  with  the  provisions  of  this  act,  the  data 
filed  in  his  office  being  the  basis  of  such  certificate.  (Id.,  sec. 
12,  as  amended  April  4,  1887.) 

82.  Auditor's  Certificate  of   Tax  Levy : — The  auditor  of 
state  shall  annually,  on  or  before  the  second  Monday  of  June  in 
each  year,  ascertain  the  amount  of  sinking  fund,  and  interest 
accrued,  and  to  accrue,  before  the  tax  for  the  next  year  shall 
be  levied,  upon  all  bonds  so  registered  in  his  office,  and  shall 
certify  the  same  to  the  proper  county  clerk,  setting  forth  the 
amount  thus  due,  and  to  become  due,  for  such  year.     There- 
upon the  county  clerk   and  recorder  are  required  to  levy   a 
sufficient  tax  upon  the  taxable  property  of  the  county  to  meet 
the  amounts  so  becoming  due.     (Id.,  sees.  13,  14.) 

83.  Payment,   When  and  How  Made : — Upon  the  collec- 
tion of  taxes  so  levied,  and  the  receipt  of  the  same  by  the 
county  treasurer,  he  is  required  to  apply  the  proceeds  thereof 
to  the  purposes  for  which  the  same  were  collected  and  to  pay  the 
accrued  interest  upon  such  registered  bonds  at  the  place  where 
the  same  may  be  payable.     When  the  interest  or  principal  is 
payable   in    New   York   city  or    elsewhere  out  of  the   state, 
payments  shall  be  made  at  the  place  designated,  or  at  the  finan- 
cial agency  of  the  state  for  such  purposes.     The  funds  shall  be 
transmitted  by  the  treasurer  by  check  or  draft  so  indorsed  as 
to  show  upon  what  bond  or  bonds  the  funds  are  to  be  applied. 
At  the  request  of  the  holder  of  the  bonds,  payment  may  be 
made  at  the  office  of  said  treasurer. 

84.  When  any  bond  or  coupon  is  paid,  the  treasurer  .shall 
cause  the  same  to  be  cancelled  and  filed  with  the  county  clerk, 
who  shall  make  an  entry  thereof  in  his  record  where  said  bonds 
are  registered.     The  county  treasurer  is  liable  on  his  official 
bond  for  the  faithful  disbursement  of  all  moneys  collected  or 
received  by  him  for  such  purposes.    Upon  an  order  of  the  county 
commissioners,  the  county  treasurer  and  clerk  shall  publish  a 
detailed  statement  of  business  transacted  by  them  under  the 
provisions  of  this  act.     (Id.,  sees.  15  to  19.) 

85.  Registration  of  Village  and  City  Bonds : — All 
bonds  hereafter  issued  by  any  village  or  city  of  the  second  class, 


178  NEBRASKA — REGISTRATION    OF    BONDS. 

shall,  before  sale,  be  presented  to  the  state  auditor  and  he  shall 
examine  the  same  and  all  proceedings  relating  to  their  issue, 
and  if  he  shall  be  satisfied  that  such  bonds  have  been  legally 
issued  for  a  lawful  purpose,  he  shall  register  the  same  in  his 
office,  and  under  his  official  seal  certify  en  such  bonds  the  fact 
that  they  have  been  regularly  and  legally  issued  and  have  been 
registered  in  his  office.  Upon  the  presentation  by  holders  of 
any  such  bonds  heretofore  issued,  the  auditor  is  required  to 
examine  and  certify  them  in  the  same  manner.  It  is  made  the 
duty  of  the  clerk  of  any  village  or  city  of  the  second  class  in 
which  any  bonds  may  be  issued,  to  transmit  with  such  bonds 
to  the  state  auditor  a  duly  certified  transcript  of  all  proceedings 
had  previous  to  their  issue  relating  thereto,  and  also  to  furnish 
the  holder  of  any  bond  of  such  village  or  city,  on  demand,  a 
similar  transcript.  (Id.,  sees.  29  to  31;  passed  1885.) 

86.  Registration  of  Precinct  Bridge  Bonds  : — When- 
ever the  holder  of  any  precinct  bonds  issued  for  the  purpose  of 
the  erection  of  bridges  within  the  limits  of   the  county,  shall 
present  the  same  to  the  auditor  and  secretary  of  state  with 
duplicate  statements  of  the  question  of  submission,  notice  and 
proof  of  publication,  and  return  of  votes  thereon,  duly  certified 
by  the  county  clerk,  it  is  the  duty  of  said  officers,  in  case  they 
are  satisfied,  upon  examination  of  said  bonds  and  statements, 
that  such  bonds  are,  in  all  respects,    in  due  form,   and  have 
been  properly  issued,  to  enter  that  fact  upon  their  records, 
together  with  the  submitted  statements,  and  thereupon  to  place 
their  joint  certificate  upon  said  bonds  that  they  have  been  issued 
pursuant  to  law,  and  the  auditor  shall  register  the  same  in  his 
office.     The  auditor  is  required  to  certify  to  the  proper  county 
board  the  amount  of  tax  required  to  be  levied  to  meet  the  pay- 
ment of  such  bonds  or  interest  as  the  same  ma)^  accrue,  sub- 
stantially the  same  as  in  the  case  of  county  bonds.     (Id. ,  sees. 
23,  24;  passed  in  1885.) 

87.  Precinct   Refunding   Bonds : — When   the  county 
commissioners  of    any   county   issuing  bonds   to   refund   the 
bonded  indebtedness  of  any  precinct,  and  in  case  an  exchange 
of  said  refunding  bonds  cannot  be  effected,   the  said  commis- 


NEBRASKA — PRECINCT    BONDS— REGISTRATION.  179 

sioaers  are  authorized  to  sell  said  refunding  bonds,  at  not  less 
than  their  face  value,  in  such  sums  as  may  be  necessary  to 
create  a  fund  for  the  redemption  of  such  outstanding  bonds, 
the  proceeds  thereof  to  be  used  only  for  the  purpose  of  such 
refunding.  (Id.,  sees.  23,  24;  passed  in  1885.) 

88.  Registration  : — It  is  the  duty  of  the  state  auditor  to 
register  such  substituted  bonds,  and  of  the  secretary  of  state 
and  auditor  to  certify  the  same,  and  a  tax  to  pay  the  interest  and 
principal  shall  be  levied  in  the  same  manner  as  provided  in  the 
case  of  other  precinct  bonds.     The  county  clerk  is  required  to 
certify  to  the  state  auditor  the  number,  amount  and  description 
of  each  bond  cancelled  or  to  be  cancelled  and  refunded,  and 
the  amount  due  thereon  for  principal  and  interest,   and  there- 
upon the  auditor  is  authorized  to  register  a  similar  amount  of 
refunding  bonds,  but  in  no  case  shall  the  auditor  register  any 
refunding  bonds  in  excess  of  the  amount  so  certified  to  him. 
Said  bonds  shall  be  entitled  to  registration  in  the  order  that 
they  are  presented  to  the  auditor. 

89.  Registration  of  Other  Precinct  Bonds  :— The  reg- 
istration herein  provided  for  shall  apply  to  all  refunding  bonds 
issued,  and  to  all  other  precinct  bonds  that  are  or  have  been 
legally  issued  and  are  not  now  in  litigation.     (Id.,  sees.  25  to 
28;  passed  in  1885.) 

90.  Registry  of  Precinct  Bonds  with  County  Clerk  : — It  is 
the  duty  of  precinct  and  township  officers  to  file  for  record  with 
the  county  clerk  the  question  of  submission,  notice  and  proof 
of  publication,  and  the  return  of  votes,  and  to  register  with  such 
clerk  all  precinct  or  township  bonds  voted  and  issued  as  herein- 
before provided.     It  is  the  duty  of  the  county  clerk  on  presenta- 
tion of  any  precinct  or  township  bonds  for  registry,  to  register  the 
same  in  a  book  prepared  for  that  purpose,  showing  the  number 
or  name  of  the  precinct  or  township,,  number  and  date  of  the 
bond,  to  whom  and  where  payable,  when  the  interest  and  prin- 
cipal becomes  due,  amount  of  bond,   and  a  reference  to  the 
registration  of  the  proceedings  relating  to  the  issue  thereof. 
(Id.,  sees.  6  to  9;  passed  in  1873.) 


CHAPTER  XV. 


MISSOURI. 


References  are  to  the  sections  in  the  Statutes  of  1879,  except  as  other- 
wise indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Present  Constitution  adopted  November  30,  1875. 

1.  State  Credit : — The  general  assembly  has  no  power 
to  give  or  lend  the  credit  of  the  state  in  aid  of  or  to  any  person, 
association  or  corporation,  municipal  or  otherwise,  or  to  sub- 
scribe for  stock  in  any  corporation  or  association,    except   to 
secure  loans  heretofore  extended  to  certain  railroads.     (Art.  4, 
sees.  45,  49.) 

2.  State  Indebtedness  : — The  general  assembly  has  no 
power  to  contract  any  debt  or  liability  in  behalf  of  the  state,  or 
to  issue  bonds  or  other  evidences  of  indebtedness,  except  in 
certain  specified   cases,  among  which  are:   to  renew  existing 
bonds,  when  they  cannot  be  paid  at  maturity;  to  incur  a  debt 
of  not  to  exceed  twenty-five  thousand   for  any  one  year,  pay- 
able in  not  more  than  two  years,  in  case  of  an  emergency,  the 
governor  recommending;  and  when  in  an  emergency  the  tem- 
porary liability  of  the  state  shall  exceed  two  hundred  and  fifty 
thousand  dollars  for  any  one  year,  the  general  assembly  may 
submit  an  act  providing  for  a  loan,  accompanied  by  a  provis- 
ion for  a  tax  sufficient  to  pay  the  interest  as  it  accrues,  and 
the  principal  within  thirteen  years,  to  the  qualified  voters  of 
the  state,  at  an  election  called  for  that  purpose  by  a  notice 
published  for  three  months  prior  thereto.     A  two-thirds  ma- 
jority of  the  voters  voting  at  such  election  is  required  to  ratify 
such  act,  and  when  thus  ratified,  the  said  act  shall  be  irre- 
pealable  until  the  debt  is  fully  paid.     (Art.  4,  sec.  44. ) 

(180) 


MISSOURI — CONSTITUTIONAL    PROVISIONS.  l8l 

3.  Municipal    Credit : — The   general    assembly  has  no 
power  to  authorize  any  count}',   city,   town,  township,  or  other 
political  corporation  or  subdivision  to  lend  its  credit  or  to  grant 
any  aid  to  any  individual,  association  or  corporation,  or  to 
become  a  stockholder  in  such  corporation,  association  or  com- 
pany.    No  such  municipality  shall  hereafter  become  a   sub- 
scriber to  the  capital  stock  of  any  railroad  or  other  corporation 
or  association,  or  make  any  appropriation,  or  lend  its  credit  to 
or  in  aid  thereof,  or  in  aid  of  any  college  or  other  institution, 
whether  created  for,  or  to  be  controlled  by  the  state  or  others. 
All  authority  heretofore  conferred  for  any  of  the  said  purposes, 
by  the  general  assembly  or  by  the  charter  of  any  corporation,  is 
repealed,  but  this  section  shall  not  affect  the  right  of  any  such 
municipality  to  make  a  subscription  already  authorized  or  to 
prevent  the  issue  of  renewal  bonds,  or  to  make  other  legal  pro- 
vision for  the  payment  of  such  subscription,  or  of  any  existing 
indebtedness.1     (Art.  4,  sec.  47;  art.  9,  sec.  6.) 

4.  Municipal  Indebtedness  : — No  county,   city,  town, 
township,  school  district  or  other  political  corporation  or  sub- 
division of  this  state,  shall  become  indebted  in  any  manner  or 
for  any  purpose,  to  an  amount  exceeding  in  any  year  the  in- 
come and  revenue  provided  for  such  year,  without  the  assent 
of  two-thirds  of  the  voters  thereof,  voting  at  a  regular  election 
held  for  that  purpose,  nor  in  any  case  shall  the  indebtedness 
of  any  such  municipality,  except  for  the  erection  of  a  court- 
house and  jail,  exceed  in  the  aggregate,  five  per  cent  of  the 

1  Under  the  constitution  of  1865  the  general  assembly  could 
authorize  a  municipality  to  become  a  stockholder  in,  or  loan  its  credit 
to  any  company  or  corporation,  when  two-thirds  of  the  qualified 
voters  of  the  municipality,  at  a  regular  or  special  election,  assent  there- 
to. Concerning  this  provision  there  has  been  a  great  amount  of  discus- 
sion and  various  judicial  decisions,  as  to  whether  an  act  providing  for 
the  assent  of  two-thirds  of  the  voters  voting,  was  in  conflict  with  this 
provision.  The  supreme  court  at  first  decided  that  such  an  act  was  un- 
constitutional, but  subsequently,  in  other  cases,  on  the  ground  that  the 
state  court  had  decided  otherwise,  reversed  that  decision  and  refused  to 
follow  a  later  decision  of  the  Missouri  court,  holding  such  an  act  uncon- 
stitutional, at  least  as  to  rights  accruing  while  a  former  judicial  construc- 
tion by  the  state  courts  existed.  This  was  based  on  the  settled  principle 
that  purchasers  of  municipal  bonds  have  a  right  to  rely  on  the  existing 
decisions  of  the  highest  courts  of  the  state.  See  Cass  v.  Johnston,  95 
U.  S.,  360  (1877). 


1 82  MISSOURI — CONSTITUTIONAL — STATE    BONDS. 

value  of  the  taxable  property  therein,  to  be  ascertained  by  the 
assessment  next  before  the  last  previous  assessment  for  state 
and  count\T  purposes.  Any  such  municipality  incurring  any 
indebtedness  under  the  authority  of  such  vote,  shall  before,  or 
at  the  time  of  doing  so,  provide  for  the  collection  of  an  annual 
tax  sufficient  to  pay  the  interest  thereon  as  it  accrues,  and  also 
constitute  a  sinking  fund  to  pay  the  principal  thereof  with- 
in twenty  years.  Any  municipality  having  more  than  two- 
hundred  thousand  inhabitants,  which  has  exceeded  the  limit 
herein  prescribed,  cannot  issue  bonds  except  in  renewal  of 
outstanding  bonds.  (Art.  10,  sec.  12;  art.  9,  sec.  19.) 

5.  Special    Legislation  : — The  general   assembly  shall 
not  pass  an}^  local  or  special  laws  (among  other  things)  incor- 
porating cities,  towns  or  villages  or  changing  their  charters; 
granting    to   any    corporation,    association  or  individual  any 
special   or  exclusive  right,  privilege  or  immunity;   legalizing 
the  unauthorized  acts  of  any  officer  or  agent  of  any  county 
or  municipality;    nor  in  any  other  case  where  a  general  law 
can  be  made   applicable,  which  question  shall  be  determined 
solely  as  a  judicial  question,  without  regard  to  any  legislative 
action  or  assertion.      (Art.  4,  sec.  54.) 

6.  State  Funding  Bonds  : — To  meet  the  bonds  of  the 
state,  maturing  in  1886,  1887  and  1888,  the  Fund  Commissioners 
are  authorized  to  issue  bonds  of  the  state  to  an  amount  not 
exceeding  seven  million  dollars,  to  be  called  ' '  State  of  Missouri 
Funding  Bonds. ' '  Not  exceeding  twenty  per  cent  of  the  whole 
amount  issued  in  any  one  year,  may  be  in  denominations  of  five 
hundred  dollars  each  and  the  balance  of  one  thousand  dollars 
each.     Said  bonds  shall  be  signed  by  the  governor,  counter- 
signed by  the  secretary  of  state  and  registered  with  the  state 
auditor  and  attested  by  his  official  seal.     They  shall  be  paya- 
ble to  the  bearer,  at  the  National  Bank  of  Commerce,  New 
York,  in   twenty   years,   but  redeemable  any  time  after  five 
years,  and  bear  interest  at  a  rate  not  to  exceed  four  per  cent, 
payable   semi-annually,   and   evidenced  by  coupons  attached 
having  a  fac-simile  of  the  state  treasurer's  signature.     Each 
bond  shall  have  printed  on  its  back  a  copy  of  section  7  of  the 


MISSOURI — COUNTY    BONDS.  183 

act  under  which  they  are  issued:  "The  bonds  issued  under 
the  provisions  of  this  act  shall  have  all  the  guarantees  of  the 
several  statutory  and  constitutional  provisions  now  in  force, 
guaranteeing  any  of  the  state  bonds  at  maturity  and  the 
prompt  payment  of  the  interest  thereon."  The  bonds  shall  be 
sold  after  twenty  days'  advertising  in  one  daily  newspaper  in 
New  York  and  one  in  St.  Louis  that  sealed  proposals  will  be 
received  therefor  at  a  certain  time  specified.  (Laws  of  1885, 

P-  39J 

COUNTIES.' 

7.  County  Government : — The  county  court,  of  which 
there  are  three  judges,  has  the  control  and  management  of  all 
of  the  property  of  the  county,  the  appropriation  of  the  pro- 
ceeds thereof,  the  loaning  of  the  county  funds  and  the  auditing 
and  settling  of  all  demands  against  the  county.     (1193-1199.) 

8.  County    Bonds-': — For   the    purpose  of   building    a 
courthouse,  the  county  court  may  order  the   issue  of  bonds 
to  an  amount  not  exceeding  ten  thousand  dollars,  of  such 
form  and  for  such  time  as  may  be  deemed  expedient.     When 
necessary  for  any  county  to  incur  indebtedness  for  building  a 
courthouse  or  jail  in  excess  of  the  said  amount  and  the  total 
income  for  one  year,  on  petition  of  not  less  than  one  hundred 
qualified  tax-paying  electors,  setting  forth  the  object  and  pur- 
poses of  the  proposed  debt,  whether  it  is  desired  to  issue  bonds 
or  pay  the  same  by   a  direct  levy  of  taxes  during  a  stated 
number  of  years,  and  praying  an  election  on  said  question;  the 
county  court,  at  a  regular  term  thereof,  shall  order  a  special 
election  to  be  called  for  the  purpose  of  voting  upon  such  ques- 
tion.    Notice  thereof  shall  be  given  by  publication  in  a  news- 
paper, or  if  there  be  none,  by  written  or  printed  handbills  posted 
in  three  public  places  in  each  precinct,  twenty  days  before  such 
election.     The  notice  shall  specify  the  object  and  purposes  of 
the  proposed  debt,  time  to  run,  rate  of  interest,  and  the  rate  of 
increase  of  the  tax  levy,  and  the  day  the  election  is  to  be  held. 
Such  vote  may  be  taken  at  any  general  election.     The  result 
shall  be  certified  by  the  county  clerk  to  the  county  court  at  its 

1  Also  see  under  "  General,"  •?  31,  et.  seq.     2  Also  see  \  36. 


1 84  MISSOURI — COUNTY    BONDS. 

next  regular  session.  If  it  appears  that  a  two- thirds  vote  was 
given  in  favor  of  creating  such  bonded  indebtedness,  the  county 
court  shall  make  an  order  reciting  the  election  and  result,  and 
directing  the  issue  of  bonds  to  the  amount  proposed,  and  also 
the  levy  of  an  annual  tax  to  pay  the  interest  within  twenty 
years. 

9.  Form — Execution  : — Said  bonds  shall  be  in  denomina- 
tions of  not  less  than  one  hundred  dollars,  nor  more  than  five 
hundred  dollars,  payable  in  not  more  than  twenty  years,  at  the 
office  of  the  county  treasurer,  and  bearing  interest  at  a  rate  not 
to  exceed  six  per  cent  per  annum,  payable  semi-annually  to 
be  evidenced  by  coupons.     The  bonds  shall  be  signed  by  the 
president  of  the  count}7  court  and  countersigned  by  the  county 
clerk,  and  shall  have  printed  on  the  reverse  side  thereof  a  cop)r 
of  the  order  of  court  under  \vhich  they  are  issued. 

10.  Sale  of  Bonds : — The  county   treasurer,    under  the 
direction  of  the  county  court,  shall  publish  in  at  least  two  daily 
newspapers  in  the  state,  and  one  weekly  paper  in  the  county, 
notice  that  sealed  proposals  for  all  or  a  part  of  such  bonds  will 
be  received  at  his  office,  and  opened  by  him  in  court,  at  a  certain 
stated  time.     The   treasurer,    by    direction   of   said  court,  is 
authorized  to  refuse  any  and  all  bids,   and  re-advertise  said 
bonds,  or  he  may  sell  at  private  sale,  at  not  less  than  par,  and 
report  such  sale  to  the  next  term  of  said  court. 

11.  Limit  of  Amount  Issued : — Bonds  shall  not  be  issued 
to  an  amount,  including  existing  indebtedness,  to  exceed  in  the 
aggregate  five  per  cent  of  the  value  of  the  taxable  property  of 
the  county,  to  be  ascertained  by  the  assessment  next  before  the 
last   previous   assessment,   provided   that   for  the  purpose  of 
building  .a  courthouse  or  county  jail,  an  amount  may  be  issued 
not  to  exceed  ten  per  cent  of  such  valuation. 

12.  Registration  : — Bonds   so   issued  shall  be  registered 
with  the  county  clerk  in  a  book  kept  by  him  for  that  purpose, 
showing  the  number,  date,  amount,  date  of  sale,  name  of  pur- 
chaser, and  the  amount  for  which  the  said  bonds  were  sold. 
(6808-6816,  as  amended  in  1883.) 


MISSOURI — COUNTY    BONDS.  185 

13.  Refunding  Bonds: — Counties  having  issued  bonds 
for  courthouses  or  jails  may  refund  said  bonds  at  a  lower  rate 
of  interest,  not  exceeding  eight  per  cent,  payable  semi-annu- 
ally,  and  running  not  longer  than  ten  years,  but  payable  after 
three  years,  at  the  option   of   the  county  court.     Said  bonds 
may  be  exchanged  for  such  outstanding  bonds,  or  in  case  the 
holders  of  the  old  bonds  refuse  to  exchange,  the  new  issue  may 
be  sold  at  not  less  than  par,  but  the  amount  of  the  debt  of  the 
county  or  rate  of  interest  cannot  be  increased. 

14.  Form  of  Bonds : — Said  bonds  shall  be  numbered  in 
regular  order,  and  issued  in  denominations  of  not  less  than  one 
hundred  dollars  nor  more  than  five  hundred  dollars,  with  semi- 
annual interest  coupons  attached  and  payable  to  bearer  at  the 
office  of  the  county  treasurer. 

15.  Sale  of  Bonds : — These  bonds  shall  be  advertised  by 
the  county  treasurer  and  sold  substantially  in  the  same  manner 
as  provided  in  the  case  of  courthouse  and  jail  bonds  above. 
(Laws  of  1881,  p.  92.) 

16.  Funding  Bonds — For  County  Warrants1: — In  coun- 
ties where  the  records  have  been  destroyed,  persons  holding 
warrants  prior  to  January  i,  1886,  are  required  to  present  the 
same  to  the  county  clerk  within  four  weeks  from  notice,  such 
notice  to  be  given  by  the  county  court  by  publication  four 
times  in  a  weekly  newspaper  published  in  such  county,  notify- 
ing all  such  warrant  holders  to  thus  present  them  for  regis- 
tration, the  last  publication  to  be  two  months  prior  to  the  date 
named  for  such  presentation.     For  the  purpose  of  paying  said 
registered  warrants,   the  county  court  is  authorized  to  issue 
bonds  of  the  county  to  an  amount  not  exceeding  ten  thousand 
dollars. 

17.  Form — Sale : — They  shall  be  issued  in  denominations 
of  not  less  than  one  hundred  dollars  nor  more  than  five  hundred 
dollars,  bearing  interest  at  a  rate  not  exceeding  six  per  cent 
per  annum,  and  running  from  five  to  twenty  years.     The  bonds 
shall  be  sold  under  the  direction  of  the  county  court  at  not  less 
than  par.     (Laws  of  1887,  p.  136.) 

1  Also  see  \\  32,  34,  37. 


1 86  MISSOURI — CITY  BONDS. 

CITIES  AND  VILLAGES.' 

18.  Classification  : — All  cities  and  towns  having  a  popu- 
lation of  one  hundred  thousand  inhabitants  or  over  are  known 
as  cities  of  the  first  class;  those  having  twenty  thousand  and 
less  than  one  hundred  thousand  are  known   as  cities  of   the 
second  class;  those  having  five  thousand  and  less  than  twenty 
thousand  as  cities  of  the  third  class;  those  having  five  hundred 
and  less  than  five  thousand  as  cities  of  the   fourth  class,  and 
those  having  less  than  five  hundred  as  villages.     (4380-4385. ) 

19.  Bonds  of  Cities  of  the  First  Class  : — The  mayor 
and  municipal  assembly  (composed  of  a  city  council  of  thir- 
teen members,  and  a  house  of  delegates,  consisting  of  one  mem- 
ber from  each  ward)  may  issue  bonds  of  the  city  in  such  amounts 
and  for  such  time  and  purpose  as  may  be  required  for  current 
expenses  and  the  payment  of  maturing  bonds,  such  authority, 
however,  to  be  exercised  within  the  provisions  of   the  state 
constitution,  laws  and  city  charter  relating  thereto.     (4417.) 

20.  Bonds  of  Cities  of  the  Second  Class  : — The  mayor 
and  common  council  of  cities  of  this  class  are  authorized  to 
issue,  by  ordinance,  the  bonds  of  the  city  in  cases  within  the 
provisions  of  the  state  constitution,  statutes,  and  city  charter, 
for  such  amounts,  time,  and  purposes,  as  may  be  required  for 
the  current  expenses  of  such  city,  for  the  payment  of  maturing 
bonds  or  for  the  purpose  of  renewing  outstanding  bonds,  for 
the  payment  of  which,  the  current  funds  of  the  city  are  in- 
sufficient.    (4644.) 

21.  Same,  under  Act  of  1885 : — By  an  ordinance,  the 
common  council,  with  the  approval  of  the  mayor,  may  issue 
bonds  to  pay  the  whole  or  any  part  of  any  authorized  public 
work  or  improvement.     The  ordinance  shall  specify  the  work 
or  improvement;  the  amount  of  bonds;    the  date  of  issue,  not 
later  than  ninety  days  from  approval  by  the  mayor;  the  rate  of 
interest,  not  exceeding  six  per  cent,  payable  semi-annually ; 
shall  provide  for  an  annual  tax  to  pay  the  interest  on  such 
bonds  as  it  accrues,  and    provide  a    sinking  fund  to  pay  the 

1  Also  see  \\  30,  31,  et.  seq. 


MISSOURI  — CITY    BONDS.  187 

principal  thereof  within  twenty  years;  and  also  provide  that 
the  bonds  may  be  paid  before  the  expiration  of  such  twenty 
years,  in  whole  or  in  part. 

22.  How  Authorized : — After  the  passage  and  approval  of 
the  above  ordinance  the  city  counselor  and  comptroller  shall 
present  the  same  to  the  judge  of  the  circuit  court  of  the  county 
in  which  such  city  is  situated,  together  with  a  sworn  state- 
ment by  the  comptroller  showing  the  existing  city  indebted- 
ness at  the  date  of  the  proposed  issue;  and  also  proof  as  to  the 
value  of  the  taxable  property  of  such  city,  as  shown  by  the 
assessment  next  before  the  last,  for  city  and  county  purposes; 
with  such  other  proof  as  may  be  required  by  the  court,  who  upon 
examination  thereof,  if  he  finds  that  the  bonds  can  be  legally 
issued,  shall  so  certify  on  the  back  of  the  ordinance.  There- 
upon a  notice  of  an  election,  with  a  copy  of  the  ordinance  and 
said  certificate  shall  be  published  for  at  least  thirty  days  in  two 
or  more  newspapers  within  such  city.  If  two-thirds  of  the 
votes  cast  at  such  election  shall  be  in  favor  of  the  proposed 
issue,  application  shall  be  made  to  the  judge  of  the  circuit 
court  for  a  certificate,  that  at  the  date  of  the  proposed  issue, 
the  city  can  legally  become  indebted  to  the  amount  proposed 
to  be  issued,  and  that  such  city's  debt,  including  such  issue, 
will  not  exceed  five  per  cent  of  the  value  of  the  taxable 
property  therein,  as  required.  This  certificate  must  also  be 
indorsed  on  the  original  ordinance,  and  therewith  recorded, 
and  a  copy  thereof  must  be  printed  on  the  back  of  each  bond. 
No  such  bonds  shall  be  issued  without  the  said  certificate. 

23.  Form  of  Bond : — Each  bond  shall  recite  that  it  is 
issued  by  the  city,  pursuant  to  an  ordinance,  giving  the  title  and 
date  of  approval;  with  the  authority  of  two- thirds  of  the  voters 
at  a  special  election  held  for  that  purpose  on  the  date  named 
in  such  ordinance;  and  that  the  said  city's  indebtedness, 
including  such  bonds,  does  not  exceed  the  five  per  cent  limit; 
and  shall  also  recite  the  city's  option  to  pay  said  bonds  before 
maturity.  They  shall  be  issued  in  denominations  of  one  thou- 
sand dollars  each,  payable  to  some  person  or  order  or  to  bearer, 
with  coupons  attached  for  each  six  months'  interest.  They  shall 


1 88  MISSOURI — CITY   BONDS. 

be  signed  by  the  mayor  and  countersigned  by  the  comptroller, 
with  the  seal  of  the  city  affixed.  The  coupons  shall  be 
signed  by  the  comptroller  or  contain  his  signature  lithographed 
or  engraved  thereon. 

24.  Sale — Tax — Redemption: — The  bonds  shall  be  sold 
at  not  less  than  par,  and  any  coupons  matured   at  the  date  of 
sale  shall  be  cancelled.     The  city  must  provide  an  annual  tax 
sufficient  to  pay  the  interest  as  it  becomes  due,  and  constitute 
a  sinking  fund  to  pay  the  bonds  in  twenty  years.     The  city 
comptroller  may  determine  by  lot  what  bonds  shall  be  called  in 
under  the  option  contained  therein;  the  holder  of  such  called 
bonds  to  be  notified  by  letter,  if  his  address  is  known,  other- 
wise by  ten  days'  publication  in  a  newspaper  published  in  such 
city  and  one  published  in   the  city  of  New   York.       If  not 
presented  the  interest  on  such  bonds  so  called  shall  cease  with 
the  next  maturing  coupon  after  such  notice.     (Laws  of  1885, 
PP-  53-56.) 

25.  Bonds  of  Cities  of  the  Third  Class  : — The  mayor 
and  council  of  cities  of  this  class  may,  by  ordinance,  provide 
for  the  issue  of  bonds  payable  in  one  year,  for  an  amount  not 
exceeding  one-half  the  current  revenues  of  such  city,  and  also 
to  issue  bonds  in  renewal  of  maturing  bonds,  which  the  city  is 
unable  to  pay.     Said  renewal  bonds  shall  not  bear  interest  at  a 
rate  greater  than  the  bonds  so  renewed,  nor  run  longer  than 
ten  years.     Cities  of  this  class  may  also  issue  bonds  for  the 
purpose  of  funding  the  floating  indebtedness  thereof,  existing 
at  the  time  of  its  incorporation  as  a  city  of  the  third  class. 
Said  funding  bonds  to  bear  not  to  exceed  seven  per  cent  inter- 
est,  payable  semi-annually,   and  running  not  longer  than  ten 
years.     (Laws  of  1885,  p.  67.) 

26.  Same— Under  Act  of  i88j : — The  mayor  and  council 
may  issue  bonds  for  the  purpose  of  purchasing  or  improving 
land  for  hospitals  in  such  city  or  within  ten  miles  thereof;  for 
water- works;  sewer  carriage  and  outfall;  workhouses;    poor- 
houses;  land  not  exceeding  eighty  acres  outside  of  the  city 
limits  for  cemetery  purposes;  for  public  parks  in  or  within  three 
miles  of  the  limits  of  such  city;  and  for  public  works. 


MISSOURI — CITY,    VILLAGE   AND   SCHOOL   BONDS.         189 

27.  Limit — Tax  : — Any  city  of  this  class  cannot  become 
indebted  to  an  amount  exceeding  the  yearly  revenues  and  in- 
come thereof,  without  the  assent  of  two-thirds  of  the  voters 
voting  at  an  election  called  for  that  purpose,  nor  in  any  case  to 
an  amount  exceeding  in  the  aggregate  five  per  cent  of  the  tax- 
able property  thereof,  as  provided  in  the  constitution.     \Vlien 
a  debt  is  incurred  by  such  vote,  provision  must  be  made  at  the 
same  time  for  an  annual  tax  sufficient  to  pay  the  interest  as  it 
becomes  due,  and  provide  a  sinking  fund  to  pay  the  principal 
thereof  within  twenty  years.     (L/aws  of  1887,  p.  84.) 

28.  Bonds  of  Cities  of  the  Fourth  Class  : — The  mayor 
and  board  of  aldermen  of  cities  of  this  class  may  issue  bonds 
payable  in  one  year,  to  an  amount  not  exceeding  half  the  cur- 
rent revenues  of  such  year.     They  are  also  authorized  to  issue 
bonds  for  the  purpose  of  funding  any  floating  indebtedness  ex- 
isting at  the  time  of  such  city's  incorporation  as  a  city  of  the 
fourth  class,   or  for  the  purpose  of  renewing  any  other  bonds 
of  the  city  maturing,  and  for  the  payment  of  which  said  city 
has  not  the  required  funds.     (4939,  I/aws  of  1883,  p.  35.) 

29.  Village  Organization — Loans  : — Incorporated  vil- 
lages are  managed  by  a  board  of  five  trustees,  except  in  the 
case  of  villages  containing  twenty-five  hundred  inhabitants, 
when  said  board  consists  of  nine  trustees.     A  majority  con- 
stitute    a  quorum.     The  board  of  trustees  are  authorized  to 
borrow  money  for  necessary  village  improvements,  or  for  the 
purpose  of  supplying  the  village  with  water  or  gas.     (5005  and 
5010.) 

SCHOOL  BONDS. 

30.  For  the  purpose  of  building  schoolhouses  in  cities, 
towns  and  school  districts,  the  board  of  directors  may  issue 
bonds,  when  authorized  by  two  thirds  of  the  votes  cast  at  an 
election  held  for  that  purpose.     A  notice  of  such  election, 
signed  by  the  clerk  and  specifying  the  purposes  and  the  amount 
of  the  loan  required,  shall  be  posted  by  him  in  at  least  six  public 
places  in  the  said  school  district  twenty  days  before  the  elec- 
tion.    The  bonds  shall  not  run  more  than  twenty  years,  and 


190  MISSOURI — FUNDING    AND    COMPROMISE    BONDS. 

bear  interest  at  a  rate  not  exceeding  the  highest  legal  contract 
rate.  The  directors  shall  provide  an  annual  tax  sufficient  to 
pay  the  interest  and  principal  as  they  become  due.  (L,aws  of 
1881,  p.  200.) 

GENERAL. 

31.  Funding  Bonds   of  Cities   and  Towns: — When 
authorized  by  a  majority  vote  at  an  election  held  for  that  pur- 
pose, cities  and  incorporated  towns  may  fund  any  part  or  all  of 
their  bonded  indebtedness  at  a  lower  rate  of  interest,  and  issue 
therefor  renewal  bonds,  payable  within  twenty  years  and  bearing 
interest  at  a  rate  not  exceeding  seven  per  cent,  payable  annually 
or  semi-annually.     At  least  ten  days'  notice  of  such  election 
shall  be  given  by  publication  in  a  local  newspaper  setting  forth 
the  object  for  which  the  same  is  called.     At  the  time  of  such 
issue  an  annual  tax  shall  be  provided,  sufficient  to  pay  the 
interest  and  principal  as  they  become  due.     (4302   and  4303. ) 

32.  Compromise  Bonds ; — Counties,    cities  and  incor- 
porated  towns   may   compromise   outstanding  bonds,  unpaid 
subscriptions  to  railroad  stock  or  judgments  thereon,  and  issue 
bonds  therefor,  when  authorized  by  a  majority  of  the  qualified 
voters  voting  at  an  election  called  for  that  purpose,  by  the 
proper  municipal  authorities,  upon  petition  of  fifty  resident  tax- 
payers.    The  submitted   proposition  must  be  spread  on  the 
records  of  the  municipality,  and  must  contain  the  amount  of 
principal  and  accruing  interest,  number  of  original  issue,  rate 
of  interest  and  time  of  maturity  of  the  outstanding  bonds  or 
indebtedness;  the  amount  on  the  dollar  for  which  the  same  are 
to  be  funded  or  compromised,  the  time  the  new  bonds  are  to 
run,  the  rate  of  interest  which  they  are  to  bear  and  the  object 
and  general  nature  of  the  funding  proposition.     This  proposi- 
tion must  be  signed  by  the  county  clerk  or  proper  municipal 
authority,  and  published  for  thirty  days  in  a  daily  newspaper, 
or  for  four  successive  weeks  in  a  weekly  newspaper,  prior  to 
such  election,  the  last  publication  of  which  shall  be  at  least  ten 
days  before  such  election.     If  there  are  no  such  newspaper  in 
the  municipality,  said  notice  shall  be  given  by  posting  at  least 


MISSOURI — FUNDING    BONDS.  IQI 

twenty-five  printed  copies  of  the  notice   in   the  most  public 
places  therein,  at  least  four  weeks  before  the  election. 

33.  Form — Sale: — The  new  bonds  shall  run  not  more 
than  thirty  years  nor  less  than  five  years,  nor  be  in  denomina- 
tions of   more  than  one  thousand  dollars  nor  less  than  one 
hundred  dollars,  and  bear  interest  at  not  exceeding  six  per  cent 
per  annum,  payable  annuall}'.     Both  bonds  and  coupons  shall 
be  made  payable  to  bearer.     If  the  holders  of  the  old  bonds  or 
indebtedness  refuse  to  exchange  them,    the  county  court  or 
proper  municipal  authorities  may  sell  the  new  issue  at  not  less 
than  par,  and  pay  off  such  outstanding  indebtedness,  provided 
the  amount  of  the  corporation's  debt  shall  not  be  increased. 
(4290-4293.) 

34.  Funding  Bonds  by  Counties  and  Townships  : — 
Any  county,  township,  or  part  of  a  township,   may -by  their 
respective  county  courts,  fund  their  existing  bonded  indebted- 
ness at  a  lower  rate  of  interest,  and  issue  new  bonds  therefor, 
on  the  surrender  and  cancellation  of  the  old  bonds.     If  the 
holders  refuse  to  exchange,   the  issue  of  such  bonds  must  be 
submitted  to  and  authorized  by  a  majority  vote  of  the  qualified 
electors  voting  at  an  election,  held  pursuant  to  an  order  of  the 
county  court,  thirty  days'  notice  being  given  by  publication  for 
four  consecutive  weeks  in  a  wreekly  paper  published  within  the 
county,  stating  the  object  and  general  nature  of  the  propo- 
sition  submitted.     Counties  having    heretofore  funded    their 
indebtedness  may  refund  the  same  without  an  election. 

35.  Form — Sale: — Said  bonds  shall  be   payable   in  not 
less  than  five  nor  more  than  thirty  years,  and  be  issued  in  de- 
nominations of  not  less  than  one  hundred  dollars  nor  more 
than  one  thousand  dollars,  and  bear  interest  at  not  exceeding 
five  per  cent  per  annum,   payable  annually,  as  evidenced  by 
coupons  attached,   both  bonds  and  coupons  being  payable  to 
bearer.     If  the  holders  of  the  old  bonds  refuse  to  exchange, 
the  court  is  authorized  to  sell  the  new  issue  at  not  less  than  par, 
and  redeem  the  old  bonds  as  they  mature,  providing  the  debt 
of  the  county  or  the  interest  thereon  shall  not  be  increased. 
(Laws  of  1887,  p.  27.) 


192  MISSOURI — JOINT    BONDS — REGISTRATION. 

36.  Joint  Courthouse   and  Jail  Bonds  ; — Any    incor- 
porated city  being  the  county-seat  is  authorized,  upon  such 
terms  as  may  be  agreed  upon,  in  conjunction  with  the  county, 
to  erect  and  maintain  a  courthouse  and  jail  in  such  county- 
seat  for  the  joint  use  of  such  city  and  county,  and  all  authority 
now  or  hereafter  existing,   by  which   counties   may  provide 
revenue  for  erecting  such  building,  may  be  exercised  jointly 
with  such  county-seat,  providing  such  county-seat  shall  not 
issue  bonds  for  such  purpose  to  an  amount,  including  existing 
indebtedness,  exceeding  five  per  cent  of  the  value  of  the  tax- 
able property  of  such  county-seat.      The  issue  of  said  bonds 
must  be  authorized  by  a  two-thirds  vote  of  the  qualified  voters 
at  an  election  held  for  that  purpose.     Said  bonds  shall  bear 
interest  at  a  rate  not   to  exceed  eight  per  cent  per  annum. 
(Laws  of  1887,  p.  133.) 

37.  Registration  of  Bonds  : — The  clerk,    auditor,    or 
comptroller  of  the  town,  county  or  city,  is  required  to  furnish  the 
state  auditor  a  sworn  statement  of  all  bonds  and  coupons  out- 
standing, with  the  date  of  their  issue  and  maturity,  the  rate  of 
interest,  place  of  redemption,  purposes  of  issue,  and  such  other 
details  as  may  be  required  by  such  state  auditor,  and  annually 
on  January  first,  a  statement  of  the  bonds  and  coupons  re- 
tired since  his  last  report,  all  of  which  shall  be  duly  entered 
by  the  said  state  auditor.     All  county,  city  or  incorporated 
town  bonds,  before  they  shall  be  valid,  must  first  be  presented 
to  the  state  auditor  for  registration.     He  shall  certify  thereon 
that  all  the  requirements  of  the  law,   and  of  the  contract  or 
conditions  under  which  said  bonds  are  issued,  have  been  com- 
plied with,  if  he  finds  upon  examination  that  such  is  the  case; 
and  the  evidence  in  proof  of  such  facts  shall  be  filed  and  pre- 
served by  the  auditor.     His  said  certificate  shall  constitute 
prima  facie  evidence  of  the  matters  therein  contained.     (4305- 
4306.) 

38.  Certain   Bonds  Exempt  from  Registration  : — Bonds 
issued  for   gas  and  water-works,   and   all  bonds  of    counties 
and   cities   of  over   three   hundred  thousand   population,    as 


MISSOURI — CANCELLATION    OF    PAID    BONDS.  193 

shown  by  the  last  United  States  census,  are  not  required  to  be 
registered.     (4310.) 

39.  Cancellation  of  Paid  Bonds  : — County,  city  and 
town  bonds,  or  the  interest  coupons  belonging  thereto,  when 
paid  or  taken  up  by  such  municipality  shall  have  the  fact 
indorsed  thereon,  holes  punched  through  them,  and  deposited 
in  the  treasurer's  office  to  be  there  kept  until  all  of  such  bonds 
are  paid  or  taken  up,  when  they  shall  be  publicly  burned  and 
destroyed  in  the  presence  of  the  county  court,  clerk,  treasurer, 
sheriff,  and  at  least  three  other  spectators.  (4295.) 


CHAPTER  XVI. 


KANSAS. 


References  are    to  the   compiled  Laws  of  1885,  except  as  otherwise 

indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  Adopted  July  29,  1859. 

1.  State  Indebtedness  : — For  the  purpose  of  defraying 
extraordinary  expenses  and  making  public  improvements,  the 
state  may  contract  public  debts  not  exceeding  in  the  aggregate 
one  million  dollars.     Such  debt  must  be  authorized  by  law  for 
some  specified   purpose,  with  a  provision  for  the  levy  of  an 
annual  tax  to  pay  the  interest  and  principal  as  they  become  due 
and  approved  by  a  majority  of  all  the  members  elected  to  each 
house.     Additional  indebtedness  may  be  contracted,  providing 
the  law  creating  such  debt  has  been  submitted  to  and  ratified 
by  a  majority  of  the  electors  voting  at  some  general  election. 
(Art.  n,  sees.  5  and  6.) 

2.  Municipal  Indebtedness  : — Provision  shall  be  made 
by  general  law  for  the  organization  of  cities,  towns  and  villages, 
and  their  power  of  taxation,  assessment,  borrowing  money, 
contracting  debts,  and  loaning  their  credit,  shall  be  so  restricted 
as  to  prevent  its  abuse.     (Art.  13,  sec.  5.) 

3.  Special  Legislation1 : — The  legislature  shall  pass  no 
special  act  conferring  corporate  powers.     (Art.  12,  sec.  i.) 

COUNTIES.2 

4.  County  Board  : — The  corporate  powers  of  the  county 
are  exercised  by  a  board  of  county  commissioners.     In  counties 
having  more  than  three  thousand  inhabitants,  the  board  con- 

1  See  pp.  40-42.     2  Also  see  under  "  General,"  §|  58-91. 

(194) 


KANSAS — COUNTY    BONDS.  195 

sists  of  one  commissioner  from  each  representative  district. 
In  other  counties  the  board  consists  of  three  commissioners. 
The  regular  sessions  of  the  county  board  are  held  at  the  county 
seat  on  the  first  Mondays  of  January,  July  and  October,  and  the 
first  Monday  after  the  first  Tuesdaj'  in  April.  Special  sessions 
may  be  held  on  call  of  the  chairman  at  the  request  of  two 
members  of  the  board.  The  county  clerk  is  the  clerk  of  the 
county  board.  (Chap.  25,  arts,  i  to  3.) 

5.  Loans  and   Expenditures  : — The  board  of   county 
commissioners  are  authorized  to  borrow,  upon  the  credit  of  the 
county,  a  sum  sufficient  for  the  erection  of  county  buildings  or 
to  meet  the  current  expenses  of  the  county  in  case  of  a  deficit 
in  county  revenue. 

6.  Vote  Required  to  Authorize : — They  shall  not  borrow 
money  for  such  purposes,  or  proceed  to  build  any  permanent 
county  building,  or  assess  any  taxes  for  that  purpose,  without 
first  having  submitted  the  question  to  a  vote  of  the  electors  of 
the  county  at  some  general  or  special  election. 

7.  How  Question  Submitted : — A  written  or  printed  notice, 
stating  the  sum  desired  to  be  raised,  and  the  time  when  the 
question  will  be  submitted,  must  be  posted  in  five  of  the  most 
public  places  in  each  township  for  at  least  thirty  days  pre- 
viously.    The  vote  shall  be  taken  by  ballot,  and  a  majority  of 
the  votes  cast  at  such  election  shall  be  required  to  authorize  the 
loan.     (Chap.  25,  art.  2.) 

8.  Bonds   for   Fairgrounds : — When  authorized  by  a 
majority  vote  of  the  electors  of  the  county  voting  thereon,  the 
board  of  commissioners  of  any  county  are  authorized  to  issue 
bonds  or  to  appropriate  from  the  county  treasury  a  sum  not 
exceeding  in  amount  one  and  three-fourths  mills  on  the  dollar 
of  the  taxable  property  of  the  county,  to  be  expended  under  the 
direction  of  the  agricultural  society  of  such  county,  with  the 
consent  of  the  said  board,  for  the  purchase  and  improvement 
of  a  fairground  for  the  use  of  such  society.     All  property  thus 
purchased  shall  be  held  in  trust  by  the  board  of  county  com- 
missioners for  the  use  of  such  society.     (Chap.  2.) 


196  KANSAS — BONDS — CITIES    OF    FIRST    CLASS. 

CITIES.  ' 

g.  Cities  Classified : — All  cities  of  more  than  fifteen 
thousand  inhabitants  are  known  as  cities  of  the  first  class;  all 
those  having  a  population  of  over  two  thousand,  and  not 
exceeding  fifteen  thousand,  as  cities  of  the  second  class;  and 
those  organized  as  cities,  towns  or  villages,  and  containing  not 
more  than  two  thousand  inhabitants,  are  cities  of  the  third 
class.  (Chap.  18,  art.  i;  chap.  19,  art.  i;  chap.  19  a,  art.  i.) 

CITIES  OF  THE  FIRST  CLASS. 

10.  Bonds  to  Pay  for  Bridges,  Sewer  Indebtedness, 
etc.: — In  case  any  city  of  the  first  class  has  heretofore  con- 
structed any  bridges  or  culverts,  or  any  sewers  under  contracts 
duly  authorized,  and  the  same  shall  not  have  been  fully  paid 
for,  the  mayor  and  council  of  such  city  in  either  case  may  pro- 
vide for  the  payment  of  such  unpaid  indebtedness  by  issuing 
bonds  or  other  evidences  of  indebtedness  of  the   city,  to   an 
amount  not  exceeding  the  amount  of  such  principal  indebted- 
ness and  interest  at  a  rate  not  to  exceed  seven  per  cent  from  the 
time  when   the   same  should  have  been  paid;  or  they  may 
refund  or  re-issue  any  bonds  or  other  evidences  of  indebtedness 
which  may  have  been  previously  issued  on  account  of  any  such 
improvement  and  then  remaining  unpaid.     (Chap.  95,  I^aws  of 
1885;  approved  March  2,  and  in  force  March  3,  1885.) 

11.  Bonds   for   Paving   Indebtedness: — In  case  any 
such  city  of  the  first  class  has  caused  to  be  done  any  guttering, 
paving,  or  macadamizing  under  a  duly  authorized  contract,  and 
the  same  shall  not  have  been  fully  paid  for,   the  mayor  and 
council  are  authorized  to  make  provision  for  such  payment  by 
the  levy   of   taxes   or  assessments  therefor,  or  the  issue  of 
improvement  or  special  bonds,  or  other  evidences  of  indebted- 
ness against   the  property  liable;    or  they  may  re-issue  any 
improvement  or  special  bonds,  or  other  evidences  of  indebted- 
ness, previously  issued  on  account  of  any  such  improvement 
and  remaining  unpaid.     (Id.) 

12.  Bonds  for  Public  Parks  : — For  the  purpose  of  pro- 
1  Also  see  under  "  General,"  \\  58-91. 


KANSAS — BONDS — CITIES    OF    FIRST    CLASS  197 

viding  parks  or  public  grounds  within  or  adjacent  to  cities  of 
the  first  class,  such  cities  may  issue  bonds  bearing  a  rate  of 
interest  not  exceeding  six  per  cent,  payable  semi-annually, 
with  coupons  attached,  and  running  not  longer  than  ten  years 
from  date,  to  be  issued  in  such  sums  and  amounts  as  may  be 
prescribed  by  ordinance. 

13.  Limit  of  Amount — Tax : — No  one  city  shall  issue 
such  bonds  to  an  amount  exceeding  one  hundred  and  twenty 
thousand  dollars.     Any  city  issuing  bonds  under  this  act  is 
required  annually  to  levy  a  tax  sufficient  to  pay  the  interest 
thereon,  and  after  five  years  an  amount  sufficient  to  create  a 
sinking  fund,    to  pay  the  principal  at  maturity.     (Chap.   94, 
Laws  of  1885,  in  force  Feb.  24,  1885.) 

14.  General  Improvement  Bonds  : — For  the  purpose 
of  paying  for  any  improvements  of  a  general  nature,  not  other- 
wise provided  for,  and  for  the  construction  of  water-works  and 
water-power,  the  mayor  and  council  of  any  city  of  the  first 
class  may  from  time  to  time  borrow  money  and  issue  bonds 
therefor,  when  so  authorized  or  instructed  by  two  thirds  of  all 
the  votes  cast  at  an  election  held  in  such  city  for  that  purpose. 

15.  How  Issued: — Said   bonds  shall  be  payable  in  not 
less  than  ten  nor  more  than  twenty  years,  and  bear  interest  at 
not  to  exceed  six  per  cent  per  annum,   payable  annually  or 
semi-annualty.     They  must  be  sold  at  not  less  than  par.     The 
council  shall  levy  the  necessary  taxes  to  meet  the  payment  of 
the  bonds  as  they  become  due,  but  when  they  are  issued  for 
improvements  chargeable  to  any  particular  property,  the  tax 
to  pay  the  same  shall  be  levied  only  against  such  property. 
(Chap.  37,  Laws  of  1881.) 

16.  Internal   Improvement    Bonds : — Whenever    the 
mayor  and  council  of  any  city  of  the  first  class  under  any 
authority  vested  in  them  by  law,  shall  cause  any  street,  avenue 
or  alley  to  be  graded,  curbed,  guttered,  paved,  or  macadamized; 
any  sewer  to  be  constructed,  the  expense  of  which  is  charge- 
able to  the  abutting  property;     any   bridge  over  a  water- 
course to  be  erected;  or  areas  of  street  intersections  to  be 


198          KANSAS — CITIES — FIRST    CLASS — SECOND    CLASS. 

paved  or  improved,  they  may  in  their  discretion,  provide  for 
the  payment  of  the  cost  thereof  in  installments,  and  issue  im- 
provement bonds  of  the  city  therefor.  Such  installments  shall 
bear  interest  at  eight  per  cent  from  the  date  of  the  issue  of  said 
bonds. 

17.  Form — Disposition  : — Said  bonds  shall  run  not  longer 
than  ten  years  and  bear  interest  at  not  to  exceed  seven  per 
cent,  and  the  credit  of  the  city  shall  be  pledged  for  the  pay- 
ment thereof.     They  may  be  issued  directly  to  the  contractor, 
or  sold  and  the  proceeds  applied  to  the  purpose  for  which  they 
were   issued.     The   fund  raised  by  such  special  assessments 
shall  be  applied  towards  the  redemption  of  such  bonds  or  to 
the  reimbursement  of  the  city,  when  said  bonds,  or  any  part 
thereof,  have  been  redeemed  from  the  general  taxes  of  the  city. 

18.  City  Improvement  Bonds : — For  the  cost  of  any 
such  improvements  as  are  made  payable  out   of  the   general 
improvement  fund  of  the  city,  the  mayor  and  council  may  also 
issue  bonds  of  the  same  tenor  and  effect,  and  such  bonds  and 
the  interest  thereon,  shall  be  paid  by  a  levy  of  a  general  tax 
on  all  of  the  property  of  the  city.     (Chap.   101,  L,aws  of  1887, 
in  force  Feb.  23,  1887;  also  see  chap.  99  Ibid.) 

CITIES  OF  THE  SECOND  CLASS. 

19.  General  Improvement  Bonds — The  council  of  any 
city  of  this  class,  for  the  purpose  of  paying  for  any  improve- 
ments of  a  general  nature,  may  from  time  to  time  borrow  money 
and  issue  bonds  therefor,  and  street  bonds  to  contractors  and 
others  on  account  of  such  improvements,  but  the  issue  of  such 
bonds  must  first  be  authorized  by  a  majority  of  all  the  votes 
cast  at  an  election  held  for  that  purpose.     Said  bonds  shall  be 
payable  in  not  less  than  ten  nor  more  than  twenty  years,  and 
bear  interest  at  not  to  exceed  ten  per  cent.     Street  bonds,  not 
exceeding  in  amount  the  taxes  levied  for  the  current  year 
applicable  to  that  purpose,  shall  be  payable  in  not  more  than 
one  year,  and  bear  interest  at  not  exceeding  ten  per  cent.     The 
necessary  taxes  to  pay  said  bonds  and  interest  must  be  levied, 
but  where  any  bonds  are  issued  for  any  improvements  charge- 


KANSAS — BONDS — CITIES    OF   SECOND    CLASS.  199 

able  to  any  particular  or  local  property,  the  taxes  to  pay 
the  same  shall  be  levied  only  on  such  property.  (Chap.  19, 
art.  3.) 

20.  Special    Assessment    Bonds : — The    mayor    and 
council  of  any  city  of  the  second  class  may  issue  the  bonds  of 

the  city  for  the  cost  of  draining,  paving,  macadamizing,  curbing 
and  guttering  streets  and  avenues,  payable  one  third  in  one 
year,  one  third  in  two  years,  and  one  third  in  three  years,  or 
one  fifth  annually  in  one  to  five  years  respectively,  with  inter- 
est at  a  rate  not  exceeding  eight  per  cent  per  annum,  payable 
annually;  and  to  pay  the  principal  and  interest  maturing  during 
any  year,  assessments  shall  be  made  upon  the  taxable  property 
liable.  (Chap.  99,  sec.  4,  Laws  1885.) 

21.  Improvement    Bonds : — When    the    city    council 
shall  deem  it  necessary  to  pave,  macadamize,  curb,  gutter,  or 
otherwise  improve  any  street,  avenue,  alley  or  lane  within  the 
limits  of  the  city,  for  which  a  special  tax  is  to  be  levied,  such 
council  may,  by  resolution,  declare  such  work  or  improvement 
necessary  to  be  done.     This  resolution  shall  be  published  for 
four  weeks,  or  ten   days  daily,  in  the  city's  official  paper, 
and  if  a  majority  of  the  resident  owners  of  the  property  liable 
to  taxation  therefor  shall  not  within  twenty  days  thereafter 
file  with  the  city  clerk  their  protest,  the  council  may  cause  such 
improvement  to  be  made  and  levy  the  tax  therefor.     When- 
ever three  fourths  of  the  resident  owners  fronting   on   a  street 
in  two  or  more  adjacent  blocks  shall  petition  the  council  for 
the  improvement  of  the  same,   the  council  may  proceed   to 
make  such    improvement,    and    levy  taxes    therefor.       The 
council   may  provide  for  the  cost  of  any  such  improvement 
to  be  paid  by  installments,  and  for  such  installments  may  issue 
improvement  bonds,  payable  in  installments  of  an  equal  amount 
in  each  year. 

22.  Form,  Limit  and  Disposition  of  Bonds : — Said  bonds 
shall  run  not  longer  than  ten  years  and  bear  interest  at  a  rate 
not  exceeding  seven  per  cent,  and  be  issued  in  such  denomi- 
nations as  the  mayor  and  council  may  deem  proper.    They  shall 
be  made  payable  from  the  assessments  to  be  made  each  year, 


200  KANSAS — CITIKS    OF   SECOND    CLASS. 

so  far  as  the  same  are  chargeable  upon  the  abutting  lands. 
Such  bonds  shall  not  be  issued  in  excess  of  the  contract  price 
of  the  work  or  improvement  on  account  of  which  they  are 
issued.  They  may  be  issued  to  the  contractor,  or  may  be  sold 
at  not  less  than  par,  and  the  proceeds  applied  to  the  payment 
of  such  improvements.  (Id.  sec.  6.  as  amended  by  chap.  104, 
Laws  1887.) 

23.  City  Improvement  Bonds  : — For  the  costs  of  such 
improvements  as  are  by  law  made  payable  out  of  the  general 
improvement  fund  of  the  city,  the  mayor  and  council  may  also 
issue  bonds  of  the  same  tenor  and  effect,  and  such  bonds  shall 
be  paid  by  the  levy  of  a  general  tax  on  all  property  in  the  city. 
(Id.) 

24.  Funding    Bonds  .  —  The  council  of   a  city  of  the 
second  class,  when  necessary,  may  provide  for  issuing  bonds 
for  the  purpose  of  paying  any  and  all  indebtedness  of  such  city 
at  dollar  for  dollar.     Said  bonds  shall  be  payable  in  not  less 
than  ten  years  nor  more  than  twenty  years,  and  bear  interest 
at  a  rate  not  exceeding  ten  per  cent  per  annum,  with  coupons 
attached,  payable  annually  or  semi-annually. 

25.  Tax  for  Payment : — The  council,  in  addition  to  other 
taxes,  shall  lev}'  a  sufficient  tax  to  provide  for  the  payment  of 
the  interest  and  principal  of  such  bonds  as  they  become  due, 
and  to  make  provision  for  a  sinking  fund  to  redeem  the  bonded 
indebtedness  of  the  city  at  maturity.     (Chap.  19,  art.  3.) 

26.  Bonds  for  Funding  Railroad  Indebtedness: — Any 

city  of  the  second  class  may  issue  funding  bonds  for  the  pur- 
pose of  cancelling  or  satisfying  any  bonded  indebtedness  issued 
on  account  of  any  subscription  to  the  capital  stock  of  any 
railroad  company  "to  such  an  amount  as  may  be  necessary, 
not  more  than  seventy -five  per  cent  of  the  indebtedness  pro- 
posed to  be  satisfied  thereby. ' '  Before  any  such  bond  shall  be 
issued  an  ordinance  shall  be  duly  passed  providing  for  such 
issuance,  exchange  or  sale. 

27.  Form  of  Bonds : — Said  bonds  shall  be  issued  in  sums 
of  not  less  than  one  hundred  nor  more  than  one  thousand 


KANSAS — FUNDING    AND    REFUNDING    BONDS.  2OI 

dollars  each,  payable  in  not  more  than  twenty  years,  with 
interest  at  a  rate  not  to  exceed  eight  per  cent  per  annum,  pay- 
able semi-annually,  with  coupons  attached,  both  principal  and 
interest  being  payable  at  the  fiscal  agency  of  the  state  in  the 
city  of  New  York.  The  bonds  and  coupons  shall  be  signed 
by  the  mayor  and  city  clerk  and  shall  have  the  seal  of  the  city 
attached. 

28.  How    Exchanged    or    Sold :  —  Said   bonds   may   be 
exchanged  at  their  par  value  for  outstanding  railroad  bonds  at 
a  rate  not  to  exceed  seventy  cents  on  the  dollar,  or  may  be  sold 
for  cash  at  not  less  than  ninety-five  cents  on  the  dollar,  the 
proceeds  to  be  expended  only  for  the  purchase  of  such  out- 
standing bonds  at  a  rate  not  to  exceed  seventy-five  cents  on 
the  dollar. 

29.  Tax  for  Payment : — It  is  made  the  duty  of  the  mayor 
and  council  to  annually  levy  and  collect,  in  addition  to  other 
taxes,  a  sufficient  sum  to  pay  the  interest  and  principal  of  such 
bonds  as  they  fall  due;  and  if  such  bonds  are  not  made  payable 
by  annual  installments,  to  provide  a  sinking  fund  sufficient  for 
their  redemption  at  maturity.     Any  of  such  bonds  or  coupons 
shall  be  receivable  for  taxes.     (Chap.  19,  art.  7;  act  of  1876.) 

30.  Refunding  Bonds  of  Cities  of  the  Second  and 
Third  Classes : — Every  city  of  the  second  or  third  class  is 
authorized  to  refund  its  maturing  bonds  issued  on  account  of 
any  railroad  subscription  or  other  purpose,  at  a  rate  not  exceed- 
ing sixty  cents  on  the  dollar  of  said  indebtedness. 

31.  How  Issued : — When   the   mayor  and  council  have 
determined  at  what  per  cent  they  will  refund  said  indebtedness, 
it  is  made  the  duty  of  the  mayor  and  clerk  to  issue  bonds  at 
that  rate  to  the  holder  of  such  indebtedness,  upon  request  of 
such  holder.     Said  bonds  shall  be  payable  in  twenty  years,  and 
bear  interest  at  the  rate  of  seven  per  cent  per  annum,  payable 
semi-annually  on  the  first  days  of  January  and  July,  with 
coupons  attached  signed  by  the  clerk.     The  bonds  shall  be 
signed  by  the  mayor  and  clerk  and  attested  with  the  city  seal. 
They  may  be  issued  in   denominations  of  fifty  dollars,  one 


2O2          KANSAS  —  CITIES    OF   SECOND    AND    THIRD    Ci.ASS. 

hundred  dollars,  two  hundred  dollars,  five  hundred  dollars  and 
one  thousand  dollars,  and  payable,  both  principal  and  interest, 
at  the  office  of  the  city  treasurer. 

32.  Record — Tax: — It  is  the  duty   of   the  city   clerk  to 
keep  a  record  of  all  bonds  so  issued,  showing  the  date,  number, 
and  amount,  to  whom  and  on  what  account  issued;  and  a  record 
of  every  bond  refunded.    It  is  the  duty  of  the  mayor  and  council 
to  provide  by  levy  a  sufficient  tax  to  pay  the  interest  and  prin- 
cipal as  they  become  due,  and  in  case  of  failure  so  to  do,  those  so 
neglecting  or  refusing  shall  be  individually  liable  for  any  bond  or 
coupon  falling  due  during  the  year  for  which  such  tax  should 
have  been  levied.     After  five  years  an  annual  tax  not  exceed- 
two  mills  on  the  dollar  shall  be  levied  to  provide  a  sinking 
fund  for  the  payment  of  such  bonds  at  maturity.     (Id.,  act 
of  1877.) 

33.  Limit  of  Indebtedness  of  Cities  of  the  Second 
Class  : — At  no  time  shall  all  the  bonded  indebtedness  of  any 
city  of  the  second  class  exceed  ten  per  cent  of  the  assessed 
value  of  all  the  taxable  property  therein,  as  shown  by  the  last 
previous   assessment.      Bonds   issued   for    improvements,   for 
which  a  special  tax  is  levied  upon  the  property  improved,  shall 
not  be  included  in  estimating  the  bonded  indebtedness,  nor 
shall  this  limitation  be  construed  to  prevent  the  issue  of  bonds 
to  refund  existing  bonded  indebtedness.     (Chap.    99,  sec.  5, 
Laws  of  I885.)1 

CITIES  OF  THE  THIRD  CLASS. 

34.  Funding    Bonds  : — The  council  of  any  city  of  the 
third  class  may  provide  for  issuing  bonds  for  the  purpose  of 
funding  any  indebtedness.     Said  bonds  shall  be  payable  in  not 
less  than  ten  nor  more  than  twenty  years,  and  bear  interest  at 
a  rate  not  exceeding  ten  per  cent  per  annum,  with  interest 
coupons  payable  annually  or  semi-annually.     Said  bonds  shall 

1  We  omit  the  law  authorizing  cities  of  the  second  class  to  issue 
bonds  to  encourage  the  establishment  of  manufactories  and  other  enter- 
prises tending  to  develop  and  improve  the  city.  (Sec.  76,  chap.  100, 
L,aws  of  1872.)  Such  bonds  have  been  decided  to  be  invalid,  the  pur- 
pose not  being  public.  See  chap.  3,  herein. 


KANSAS — CITY    AND    TOWNSHIP    BONDS.  203 

not  be  issued  for  the  purpose  of  funding  said  indebtedness, 
unless  for  every  dollar  of  outstanding  indebtedness  the  city 
shall  issue  in  exchange  such  bonds  at  not  less  than  ninety 
cents  on  the  dollar.  Said  bonds  shall  not  be  issued  until  the 
council  shall  be  instructed  so  to  do  by  a  majority  of  all  the 
votes  cast  at  an  election  held  for  that  purpose.'  (Chap.  19  a, 
art.  3.) 

35.  General    Improvement    Bonds : — The  council  of 
any  city  of  the  third  class  may,  for  the  purpose  of  paying  for 
improvements  of  a  general  nature  in  the  city,  from  time  to  time 
borrow  money  and  issue  bonds  therefor,  when  instructed  by  a 
majority  of  all  the  votes  cast  at  an  election  held  for  that  pur- 
pose.    Said  bonds  shall  be  payable  in  not  less  than  ten  nor 
more  than  twenty  years,  with  interest  at  a  rate  not  exceeding 
ten    per   cent,  with   coupons   attached,    payable   annually   or 
semi-annually.     The  council  shall  levy  the  necessary  taxes  to 
pay  such  bonds  and  interest  as  they  become  due.     (Id. ) 

36.  Sinking    Fund — Limit  of  Debt : — The  council  of 
cities  of  the  third  class  are  required  to  make  provision  for  a 
sinking  fund  to  redeem  at  maturity  the  bonded  indebtedness  of 
such  city.     At  no  time  shall  all  the  bonded  indebtedness  of  a 
city  of  this  class  exceed  one  fourth  of  the  assessed  value  of  all 
the  taxable  property  thereof  as  shown  by  the  last  previous 
assessment.     (Id.) 

TOWNSHIP  BONDS. 

37.  Township  Bonds  for  Bridges  : — Upon  presentation 
of  a  petition  signed  by  not  less  than  twenty-five  voters,  the 
township  trustee,  clerk  and  treasurer  of  any  municipal  town- 
ship, are  authorized  to  submit  the  question  of  issuing  bonds 
for  the  purpose  of  building  bridges.     Within  five  days  after 
the  receipt  of  said  petition  such  officers  shall  give  notice  by 
publication  in  a  newspaper  of  general  circulation  in  the  town- 
ship, of  the  time  and  place  of  holding  such  election,  and  des- 
ignating the  point  at  which  the  bridge  is  proposed  to  be  built. 
A  majority  vote  of  the  qualified  electors  voting  at  such  election 

1  Also  see  ?  30. 


204  KANSAS TOWNSHIP    BONDS. 

is  required  to  authorize  the  issue  of  such  bonds.  Two  or 
more  adjacent  townships  may  unite  in  the  erection  of  a  bridge 
over  a  stream  separating  such  townships. 

38.  How  Issued — Limit  of  Amount : — Said     bonds  shall 
be  issued  in  sums  of  not   less  than  fifty  dollars   each,    pay- 
able in  the  discretion  of  the  officers  issuing  the  same,  in  not 
less  than  five  nor  more  than  thirty  years,  with  interest  not  ex- 
ceeding ten  per  cent  per  annum,  payable  semi-annually,  and 
shall  be  signed  by  the  to\vnship  trustee,  and  attested  by  the 
township  clerk,  who  is  required  to  keep  a  registry  thereof, 
showing  their  dates,  number,  amount,  to  \vhom  payable  and 
rate  of  interest.     The  amount  of  bonds  so  issued  shall  not  be 
greater  than  ten  per  cent  of  the  taxable  property  of  the  town- 
ship. 

39.  Bridge  Bonds   by  Unorganized  County  Town- 
ships : — In  case  an  unorganized  is  attached  to  an  organized 
county  for  judicial  purposes,  it  constitutes  one  of  the  municipal 
townships  thereof,  and  as  such  may  issue  township  bonds  to 
the  amount  of  ten  thousand  dollars,  to  be  used  solely  for  the 
construction  of  bridges  therein;  said  bonds  to  be  issued  by  a 
vote  of  the  people  in  the  manner  prescribed  by  the  laws  regu- 
lating the  sale  of  bonds,  and  construction  of  works  of  internal 
improvement.    (Chap.  72,  sec.  31,  of  L,aws  of  1887.) 

40.  Township  Bonds  for  Parks  and  Cemeteries : — 

Any  municipal  township,  for  the  purpose  of  paying  for  the  ex- 
penses of  purchasing  land  within  such  township  for  parks  and 
cemeteries,  may  issue  bonds  of  the  township.  Said  land  shall 
not  be  purchased  until  at  least  two  thirds  of  the  resident  tax- 
payers of  such  township  shall  petition  in  writing  the  board  of 
county  commissioners  to  submit  to  the  qualified  voters  thereof 
the  question  of  such  purchase  and  issue  of  bonds.  The 
petition  must  describe  the  land  proposed  to  be  purchased,  its 
cost,  and  the  amount  of  bonds  to  be  issued,  with  the  time, 
manner  and  place  where  payable.  Thereupon  the  county 
commissioners  shall  enter  an  order  reciting  the  terms  and  con- 
ditions set  forth  in  the  petition,  and  fix  the  time  for  an  election, 


KANSAS — SCHOOL    BONDS.  205 

within  sixty  days.  Thirty  days'  notice  of  such  election  shall 
be  given  by  publication  in  some  newspaper  published  and  hav- 
ing a  general  circulation  in  such  township. 

41.  How  Issued : — If  a  majority  of  the  qualified  electors 
voting  favor  such  purchase  and  issue,  the  county  board  shall 
issue  the  bonds  as  proposed,  in  the  name  of  such  township. 
They  shall  be  signed  by  the  chairman  of  the  board,  and  attested 
by  the  county  clerk  under  the  seal  of  the  county.     They  must 
be  issued  in  sums  of  one  hundred  dollars  each,  be  made  payable 
at  the  Kansas  fiscal  agency  in  New  York,  run  not  longer  than 
twenty  years,  and  bear  interest  at  a  rate  not  to  exceed  six  per 
cent,  payable  semi-annually. 

42.  Limit  of  Amount — Tax: — Said  bonds  may  be  issued 
to  an  amount  not  to  exceed  two  per  cent  of  the  assessed  valuation 
of  the  towrnship,  but  in  no  case  shall  such  issue  exceed  twenty 
thousand  dollars.     There  shall  be  levied  annually  a  tax  suf- 
ficient to  pay  the  interest  on  such  bonds  and  after  five  years  an 
amount  sufficient  to  provide  a  sinking  fund  to  pay  the  principal 
at  maturity.     (Chap.  235,  L,aws  of  1887.) 

SCHOOL  BONDS. 

43.  School   District   Officers : — The    officers  of    each 
school  district  in  this  state  are  director,  clerk  and  treasurer, 
who  constitute  the  district  board.     The  management  of  schools 
in  cities  is  vested  in  boards  of  education.     (Chap.  92,  art.  4.) 

44.  School  District  Bonds  : — For  the  purpose  of  erect- 
ing or  purchasing  schoolhouses  the  board  of  directors  are 
authorized  to  issue  the  bonds  of  the  district  in  an  amount  not 
to  exceed  six  per  cent  of  its  taxable  property  as  shown  by  the 
last  assessment.     Also  for  the  purpose  of  extending  the  time  of 
payment  of  the  bonded  indebtedness  of  any  such  district,  the 
directors  may  issue  bonds  in  a  sum  not  to  exceed  such  indebt- 
edness.    It  is  unlawful  for  any  school  district  to  create  any 
bonded  indebtedness  unless  there  are  at  least  fifteen  persons 
between   the   ages  of  five  and  twenty-one  actually  residing 
within  the  limits  thereof,  as  shown  by  a  sworn  census  taken  by 
direction  of  the  board  of  directors. 


2O6  KANSAS — DISTRICT   SCHOOL    BONDS. 

45.  Petition  and   Vote  Required: — No  such  bonds  shall  be 
issued  until  the  question  shall  have  been  submitted  to  the  qual- 
ified electors  of  the  district,  at  an  election  called  for  that  pur- 
pose, and  a  majority  of  such  electors  shall  have  voted  in  favor 
of  such  question;  and  no  such  election  shall  be  ordered  unless 
a  petition,  stating  the  purpose  for  which  the  bonds  are  to  be 
issued,  and  signed  by  at  least  one-third,  and  in  no  case  less 
than  ten  of  the  qualified  electors  of  the  district,  shall  have  been 
presented  to  the  district  board,  praying  for  a  vote  to  be  taken 
for  the  issue  of  an  amount  of  bonds  stated  in  such  petition. 
Upon  presentation  of  such  petition  the  district  board  is  required 
to  order  an  election  and  give  notice  thereof  by  posting  up 
written  or  printed  notices,  signed  by  the  clerk,  in  five  of  the 
most  public  places  in  the  district,  at  least  ten  days  before  such 
election.     The  notices  shall  state  the  object  for  which  the  elec- 
tion is  called  and  the  manner  in  which  the  question  shall  be 
voted  upon. 

46.  How  Issued : — Said  bonds  shall  be  issued  in  denomi- 
nations of  not  less  than  one  hundred  nor  more  than  five  hun- 
dred dollars  each,  and  bear  interest  at  a  rate  not  to  exceed 
seven  per  cent  per  annum,  payable  semi-annually  on  the  first 
days  of  January  and  July,  at  such  places  as  shall  be  designated 
therein,  the  principal  being  payable  within  fifteen  years  from 
their  date.     The  bonds  shall  specify  on  their  face  the  date  of 
issue,  amount,  for  what  purpose,  to  whom  issued,  time  to  run, 
rate  and  times  of  payment  of  interest,  with  interest  coupons 
attached,  the  last  of  which  shall  fall  due  at  the  maturity  of  the 
bond.     The  bonds  and  coupons  shall  be  signed  by  the  director 
and  countersigned  by  the  clerk,  and  after  registration  by  the 
clerk  shall  be  negotiable  and  transferable  by  delivery. 

47.  Registration: — The  board  of  directors  shall  cause  said 
bonds  to  be  registered  with  the  county  clerk,  such  registration 
to  show  the  number  of  the  district,  amount,  number  and  date 
of  the  bond,  to  whom  and  where  and  when  payable,  and  when 
the  principal  and  interest  are  due.     The  county  clerk  shall 
furnish  one  copy  of  his  register  to  the  county  treasurer  and 
forward  one  copy  to  the  state  superintendent,  together  with  a 


KANSAS — DISTRICT    AND    CITY   SCHOOL    BONDS.  207 

statement  showing  the  number  of  sections  of  land  and  the  acres 
of  land  assessed  and  subject  to  taxation,  the  assessed  valua- 
tion of  taxable  lands,  and  the  assessed  valuation  of  all  personal 
property  in  the  district  issuing  the  bonds,  which  statement 
shall  be  signed  by  each  member  of  the  school  board,  and  the 
county  clerk  shall  certify  to  the  correctness  thereof,  and  the 
genuineness  of  the  signature  thereto  attached. 

48.  Sale — Tax : — The  bonds  may  be  disposed  of  by  the 
district  board  at  not  less  than  ninety-five  cents  on  the  dollar, 
and  the  proceeds  applied  to  the  purposes  stated  in  the  petition. 
It  is  the  duty  of  the  board  of  county  commissioners  to  provide 
by  an  annual  levy  upon  all  the  taxable  property  in  such  district, 
a  tax  sufficient  to  pay  the  interest  accruing  upon  any  bonds  so 
issued,  and  to  provide  a  sinking  fund  for  their  final  redemption. 

49.  Wrongful  Issue : — It  is  provided  that  if  any  school 
district  officer  assists  in  any  manner  to  issue  the  bonds  of  any 
school  district  before  the  same  have  been  authorized   as  above, 
such  officer  shall  be  guilty  of  a  felony,  and  upon  conviction, 
fined  not  less  than  five  hundred  nor  more  than  five  thousand 
dollars    or   be   imprisoned   in   the   penitentiary   from   one   to 
five   years,   or  both.     The  wrongful  disposition  of  any  such 
bonds  or  the  proceeds  thereof  by  the  district  board  or  any  mem- 
ber, is  punishable  by  a  fine  of  not  less  than  one  thousand 
dollars  or  by  imprisonment  not  more  than  six  months,  or  both. 
(Chap.  92,  art.  13.) 

50.  School  Bonds  in  Cities  of  the  First  Class  : — The 
board  of  education  of  any  city  of  the  first  class  may  issue  bonds 
to  raise  funds  to  purchase  school  sites  or  erect  or  furnish  suit- 
able buildings  thereon,  or  to  provide  for  the  payment  of  any 
indebtedness  incurred  for  such  purposes,  but  no  bonds  shall  be 
issued  except  by  a  vote  of  two-thirds  of  the  members  of  the 
board  of  education  at  a  regular  meeting  thereof. 

51.  How  Issued : — The  bonds  shall  bear  date  on  the  day 
they  are  issued  and  negotiated,  and  draw  interest  at  a  rate  not 
exceeding  ten  per  cent  per  annum,  payable  semi-annually,  and 
the  principal  shall  be  payable  in  twenty  years  from  date.     The 


208  KANSAS — CITY    SCHOOL    BONDS. 

bonds  shall  be  signed  by  the  president  and  clerk  of  the  board 
of  education,  countersigned  by  the  treasurer,  and  shall  specify 
the  rate  of  interest  and  the  time  when  the  principal  and  interest 
shall  be  paid,  and  shall  not  be  for  a  less  sum  than  fifty  dollars 
each. 

52.  Limit  of  Amount — Sale: — There  shall  not  be  out- 
standing at  any  one  time  more  than  one  hundred  and  sixty 
thousand  dollars  in  the  aggregate  amount,  of  bonds  issued  by 
the  board  of  education  of  any  such  city.     Said  bonds  may  be 
sold  by  the  board  of  education  at  not  less  than  ninety  cents  on 
the  dollar. 

53.  Registration — Tax : — It  is  the  duty   of   the  clerk  of 
the  board  of  education  to  register  in  a  book  provided  for  that 
purpose  all  bonds  issued,  showing  the  number,  date,  amount, 
and  to  whom  payable.     The  board  shall  include  in  its  annual 
estimate  an  amount  sufficient  to  pay  the  interest  on  all  bonds 
outstanding  and  to  create  a  sinking   fund   for   the   redemp- 
tion of  the  same  at  maturity.     (Chap.  92,  art.  10. ) 

54.  School  Refunding  Bonds  of  Cities  of  the  First 
Class  : — The  board  of  education  of  any  city  of  the  first  class 
may  refund  its  outstanding  bonds  heretofore  issued  with  new 
bonds  issued  to  the  holders  of  such  outstanding  bonds,  but 
the   amount  shall  not  be  increased.     Such  refunding  bonds 
shall  state  for  what  purpose  issued,  be  payable  to  the  person 
to  whom  issued  or  bearer  within  thirty  years  after  date,   in 
installments  as  hereinafter  provided,  and  bear  interest  at  a  rate 
not  to  exceed  six  per  cent,  payable  semi-annually  on  the  first 
days  of  January  and  July.    Each  bond  shall  have  attached  sixty 
coupons,  the  first  ten  being  the  amount  of  the  interest  only, 
the  next  twenty  shall  each  include  one  and  seven-tenths  per 
cent  of  the  principal,  and  the  last  thirty  shall  each  include 
one-thirtieth  of  the  principal  remaining  unpaid  at  the  end  of 
fifteen  years  from  date,  and  when  all  such  coupons  shall  be 
paid  said  bonds  shall  be  cancelled  as  fully  paid. 

55.  How  Issued: — Said  bonds  shall  be  signed  by  the 
president  and  clerk  of  said  board,  under  the  seal  of  said  board, 


KANSAS — CITY    SCHOOL    BONDS — GENERAL.  209 

and  countersigned  by  the  city  treasurer.  For  failure  to  levy 
the  necessary  taxes  to  pay  the  said  bonds  or  the  interest 
thereon,  the  members  of  the  board  are  liable  personally  for  the 
amount  due,  and  in  addition  such  officers  so  at  fault  are  subject 
to  fine  and  imprisonment.  (Ibid.,  act  of  1879.) 

56.  School  Bonds  in  Cities  of  the   Second  Class  :— 

In  cities  of  the  second  class,  for  the  purchase  of  school  sites  or 
the  erection  of  school  buildings,  or  the  funding  of  the  bonded 
indebtedness,  the  board  of  education  may  issue  bonds  when 
authorized  by  a  majority  of  the  qualified  electors  voting  there- 
on at  an  election  called  for  that  purpose.  It  is  the  duty  of  the 
mayor  of  such  city,  upon  the  request  of  the  board  of  education 
to  call  an  election  for  the  submission  of  such  question,  by  a 
proclamation  made  at  least  ten  days  previous  to  such  election, 
stating  the  amount  of  bonds  desired,  and  the  purpose  for 
which  they  are  to  be  issued. 

57.  How  Issued: — Said  bonds  shall  be  payable  in  not 
more  than  twenty  years,  at  such  place  as  may  be  named  therein, 
and  bear  interest   at  not  to   exceed  ten    per  cent,  payable 
annually  or  semi-annually.    They  shall  be  signed  by  the  presi- 
dent, attested  by  the  clerk,  and  countersigned  by  the  treasurer 
of  the  board  of  education  and  issued  in  sums  of  not  less  than 
fifty  dollars.     The  bonds  shall  be  registered  by  the  clerk  of 
the  board  and  may  be  sold  by  the  board  of  education  at  not 
less  than  ninety  cents  on  the  dollar.     The  board  are  required 
to  levy  a  sufficient  tax  to  provide  for  the  payment  of  the  bonds 
and  interest,  and  the  school  fund  and  property  of  such  city  are 
pledged  for  their  payment.     (Chap.  92,  art.  n.) 

GENERAL. 

58.  Bonds   for    Bridges,     and     Buildings     for    the 
Poor : — The  proper  authorities  of  any  county,  city,  or  town- 
ship in  this  state  may  issue  bonds  for  the  purpose  of  building 
or  purchasing  bridges,  and  for  the  purpose  of  purchasing  land 
and  erecting  buildings  for  the  poor,  when  ordered  by  a  vote  of 
the  qualified   electors   of  such   county,    city,    or    township. 
Whenever  two  counties,  cities  or  townships  are  separated  by  a 


210  KANSAS  —  BRIDGE    AND    POOR    HOUSE    BONDS. 


stream  of  water,  such  municipalities  ma}^  join  in  the  construc- 
tion of  any  required  bridge,  and  issue  bonds  for  their  respect- 
ive proportions  of  the  expenses  thereof. 

59.  Submission   of  Question:  —  -When  a   petition,  signed 
by  at  least  two-fifths  of  the  voters  thereof,  as  determined  by  the 
returns  of  the  last  preceding  general  election,  shall  be  presented 
to  the  municipal  authorities  asking  that  a  vote  be  taken  upon 
the  question  of  ,  building  or   purchasing  such  bridge,  or  for 
the  purpose  of  erecting  buildings  for  the  poor,  such  officers, 
within  ten  days  thereafter,  shall  call  an  election  to  be  held 
within  forty  days  thereafter.     Notice  of  such  election  shall  be 
given  by  publication  for  at  least  three  consecutive  weeks  in 
some  newspaper  published  therein,  and  if  none  be  so  published, 
by  posting  notices  in  at  least  five  public  places  in  each  voting 
precinct  for  at  least  twenty  days  previous  to  such  election. 
The  notice  shall  set  forth  the  time  and  place  of  holding  such 
election;  the  bridge  proposed  to  be  built  or  purchased  or  the 
purchase  of  land  and  erection  of  buildings,   as  proposed,  for 
which  bonds  are  to  be  voted.      These  notices,  in  case  of  a 
county  election,  shall  be  signed  by  the  sheriff;  in  case  of  a  city 
election,  by  the  mayor;  and  of  a  township  election,  by  the  trustee, 
clerk  and  treasurer,  or  any  two  of  them.     No  second  election 
upon  any  submitted  proposition  shall  be  held  except  upon  the 
petition  of  three-fifths  of  the  legal  voters. 

60.  How  Issued  :  —  If  three-fifths  of  the  votes  cast  at  any 
such  election  are  in  favor  of  the  submitted  proposition,  the 
authorities  may  issue  the  bonds  thereof,  in  denominations  of 
not  less  than  one  hundred  dollars,  payable  at  such  place  in  the 
city  of  New  York  as  the  officers  may  direct,  in  not  less  than 
one  nor  more  than  thirty  years  from  date,  with  interest  not  to 
exceed  ten  per  cent,  payable  semi-annually.     The  bonds,  if 
issued  by  a  county,  shall  be  signed  by  the  chairman  of  the 
board  of  county  commissioners  and  attested  by  the  county 
clerk;  if  issued  by  a  city,  shall  be  signed  by  the  mayor  and 
attested  by  the  city  clerk;  and  if  issued  by  a  township,  shall 
be  signed  by  the  township  trustee,  and  attested  by  the  town- 
ship clerk. 


KANSAS — BRIDGE    AND    POOR    HOUSE    BONDS.  211 

61.  Limit  of  Amount: — The  amount  of  bonds  issued 
under  the  provisions  of  the  above  act  shall  not  exceed  a  sum 
which  inclusive  of   all  other  bonded  indebtedness  is  greater 
than  five  per  cent  of  the  taxable  property  of  such  county,  city 
or  township. 

62.  Registration  : — The   officers  of  any  county,  city  or 
township  shall  cause  a  registry  to  be  made  of  said  bonds, 
showing  the  date,  amount,  number,  maturity,  rate  of  interest, 
and  where  payable;  and  if  issued  for  the  building  or  purchase 
of  a  bridge,  what  bridge,  or  if  for  the  purchase  of  a  poor-farm 
and  erection  of  buildings  thereon,  the  same  shall  be  so  stated. 
At  the  time  of  issuing  the  bonds  the  officers  shall  transmit  to 
the  auditor  of  state  a  statement  of   the  number,  amount  and 
character  of  such  bonds,  to  whom  and  when  issued,  when  and 
where  payable,  and  for  what  purpose  issued.     It  is  also  the 
duty  of  the  officers  issuing  such  bonds  to  publish,  at  least  three 
consecutive  weeks  in  some  newspaper  of  general  circulation  in 
the  county,  township  or  city,  and  by  posting  in  six  public 
places  therein,  the  intention  of  such  officer  to  issue  said  bonds 
at  a  time  stated  in  the  notice.     It  is  the  duty  of  the  clerk  of 
such  municipalities  on  the  first  days  of  January  and  July  of 
each  year  to  transmit  to  the  state  auditor  a  certified  statement 
of  the  total  bonded  indebtedness  thereof. 

63.  Registration  by  State  Auditor : — Within  thirty  days 
after  the  delivery  of  any  such  bonds  the  holder  shall  present 
the  same  for  registration  to  the  state  auditor,  who,  upon  being 
so  satisfied  of  the  facts  required  to  be  stated  in  his  certificate 
as  herein  provided,  shall  register  the  same  in  his  office  in  the 
same  manner  that  such  bonds  are  registered  by  the  officers 
issuing  the  same,  and  shall,  under  the  seal  of  his  office,  certify 
thereon  that  they  have  been  regularly  and  legally  issued,  that 
the  signatures  are  genuine,  and  that  the  bonds  have  been  regis- 
tered in  his  office  according  to  law.     It  is  also  the  duty  of  the 
auditor  to  keep  a  full  record  of  the  bonded  indebtedness  of  the 
counties,  cities  and  townships  in  this  state,  and  he  shall  note 
therein  all  bonds  issued,  paid  or  cancelled,  as  the  same  may  be 
reported  to  him. 


212  KANSAS — INTERNAL   IMPROVEMENT   BONDS. 

64.  Fraudulent  Issue : — If   any  person  or  officer  whose 
duty  it  is  to  issue  or  assist  in  the  issuance  of  such  bonds,  shall 
issue,  or  assist  therein,  any  such  bonds  before  they  have  been 
authorized  and  prepared  as  above  provided,  he  shall  be  guilty 
of  a  felony  punishable  as  in  the  case  of  a  wrongful  issue  of 
school  bonds.     (Chap.  12  a.) 

65.  Internal    Improvement    Bonds: — The  board  of 
county  commissioners  and  authorities  of  incorporated  cities  are 
authorized  to  issue  bonds  of  the  county  or  city,  as  the  case 
may  be,  for  any  sum  necessary  for  the  purpose  of  building 
bridges,  erecting  buildings   for  public  purposes,   and  for  the 
purpose  of  purchasing  any  bridge,  or  the  stock  and  property 
of  any  bridge  company,  when  ordered  by  a  majority  of  all  the 
voters  of  such  county  or  city  voting  thereon  at  a  general  elec- 
tion held  for  the  purpose. 

66.  Question,  How  Submitted . — A  petition  shall  be  pre- 
sented to  such  authorities,  signed  by  not  less  than  fifty  voters, 
asking  for  a  vote  on  the  proposed  question.     Within  five  days 
thereafter  the  proper  authorities  shall  give  notice  by  publica- 
tion in  a  newspaper  of  general  circulation  in  the  county  or  city 
of  the  time  and  place  of  an  election  for  such  purpose.     Such 
election  shall  be  had  as  under  the  general  election  laws,  and 
the  voting  shall  be  by  ballot  ' '  For  the  bonds  "   or   "  Against 
the  bonds." 

67.  How  Issued : — Such  bonds  shall  be  issued  in  sums  of 
not  less  than  one  hundred  dollars,  payable  at  the  discretion  of 
the  authorities  issuing  the  same,  in  not  less  than  five  nor  more 
than  twenty  years,  with  interest  at  not  to  exceed  ten  per  cent, 
payable  annually  or  semi-annually,  with  coupons  attached. 

68.  Tax — Registry : — The  proper  authorities  are  required 
each  year  to  cause  to  be  levied  and  collected  a  sufficient  tax  to 
pay  the  interest  as  it  becomes  due,  and  provide  for  a  sinking 
fund  to  pay  the  principal  at  maturity.     It  is  the  duty  of  the 
clerk  to  register  such  bonds,  showing  their  dates,  numbers, 
amount,  to  whom  payable  and  rate  of  interest.     (Chap.  52.) 

69.  Funding  Bonds — Act  of  1875  : — In  all  cases  where 


KANSAS — FUNDING    BONDS.  213 

any  county,  city  or  township  has  issued  bonds  or  other 
evidences  of  indebtedness  on  account  of  'any  subscription  to  the 
capital  stock  of  any  railroad  company  or  for  the  purpose  of 
building  bridges  or  for  other  internal  improvements,  such 
municipality  may  issue  bonds  for  the  purpose  of  cancelling  or 
satisfying  such  indebtedness  when  authorized  by  two-thirds  of 
all  the  votes  cast  at  an  election  called  for  that  purpose.  Notice 
of  such  election  shall  be  given  by  publication  for  three  weeks 
previously,  stating  the  time  and  place  of  the  election,  the  par- 
ticular indebtedness  proposed  to  be  satisfied,  and  the  amount 
necessary,  the  time  when  the  bonds  are  payable,  and  the  rate 
of  interest. 

70.  Amount — How  Issued: — The  amount  of  such  bonds 
so  issued  shall  not  exceed  fifty  per  cent  of  the  indebtedness 
proposed  to  be  satisfied.     Said  bonds  shall  be  sold  at  not  less 
than  ninety  cents  on  the  dollar.     Said  bonds  shall  be  payable 
in  not  more  than  thirty  years  from  date,  in  equal  annual  install- 
ments, on  the  first  day  of  July  each  year,  with  annual  interest 
at  ten  per  cent,  and  shall  recite  the  Act  under  which  they  are 
issued.     They  shall  be  payable  at  the  office  of  the  state  treas- 
urer, and  registered  in  the  office  of  the  state  auditor,  who  is 
required   to   certify  to   the   county  clerk   the  amount   of  tax 
required  to  meet  accruing  interest  and  principal.     Such   tax 
shall  be  collected  and  paid  over  to  the  state  treasurer,  whose 
duty  it  is  to  pay  such  bonds  and  the  interest  thereon  from  the 
fund  so  collected.     (Chap.  12  a;  Laws  of  1875,  chap.  39.) 

71.  Funding    Bonds — Act    of   1879: — Counties,    cities, 
boards  of  education  of  cities,  townships  and  school  districts  are 
authorized  to  compromise  and  refund  their  maturing  indebted- 
ness of  every  description  upon  such  terms  as  may  be  agreed 
upon,  and  issue  therefor  new  bonds  to  an  amount  not  exceed- 
ing such  outstanding  indebtedness.     No  compromise  by  any 
township  or  school   district  shall  be  of  any  validity  unless 
assented  to  by  the  legal  voters  thereof  at  an  election  or  school 
meeting  called  for  that  purpose  upon  at  least  ten  days'  notice. 

72.     Bonds — How  Isstied : — Said  bonds  shall  be  issued  for  a 


214  KANSAS — FUNDING    BONDS. 

period  not  longer  than  thirty  years  and  shall  bear  interest  at 
a  rate  not  to  exceed  six  per  cent  with  semi-annual  coupons 
attached.  County  bonds  shall  be  signed  by  the  chairman  of 
the  county  board  and  attested  by  the  county  clerk  under  the 
seal  of  the  county;  city  bonds  by  the  mayor,  and  attested  by 
the  city  clerk  under  the  city  seal;  township  bonds  by  the 
trustee,  attested  by  the  township  clerk  and  countersigned  by 
the  township  treasurer;  board  of  education  bonds  by  the  pres- 
ident, and  attested  by  the  clerk  under  the  seal  of  the  board; 
school  district  bonds  by  the  director,  attested  by  the  clerk,  and 
countersigned  by  the  treasurer  of  the  board;  and  the  coupons 
shall  be  signed  by  the  chairman  of  the  board  of  county  commis- 
sioners, mayor,  trustee,  president  of  the  board,  director  and  the 
clerk  respectively,  as  the  case  may  be.  The  bonds  may  be  in 
denominations  from  one  hundred  to  one  thousand  dollars,  pay- 
able at  such  places  as  may  be  designated  therein,  and  they 
shall  recite  the  act  under  which  they  are  issued. 

73.  Registry — J^ax: — It  is   the  duty  of  the  county  clerk 
to  keep  a  record  of  all  such  bonds  issued  within  his  county, 
showing  the  date,  number,  amount,    to  whom  and  on  what 
account  issued,  and  when  due.      Said  bonds  shall  be  issued  at 
not  less  than  par,and  may  be  issued  to  the  holders  of  such  out- 
standing indebtedness  upon  the  receipt  of  the  same  for  cancel- 
lation.    It  is  the  duty  of  the  proper  officers,  or  of  the  county 
clerk,  should  they  fail  so  to  do,  to  levy  the  necessary  taxes  to 
provide  for  the  payment  of  such  bonds,  and  the  interest  thereon 
as  they  become  due,   and  in   case  of  the  failure  of  any  such 
officers,  they  are  made  individually  liable  to  the  holders  of  such 
bonds,  and  also  guilty  of  a  misdemeanor.     It  is  further  pro- 
vided that  in  case  the  proper  officers  fail  to  make  such  levy 
that  it  is  the  duty  of  the  state  auditor  to  ascertain  and  certify 
the  required  amount  to  the  county  treasurer,  who  is  required 
to  see  that  the  same  is  collected.     The  interest  coupons  on 
such  bonds,  as  they  become  due,  are  receivable  in  payment  of 
taxes  due  to  the  municipality  issuing  the  same. 

74.  Sinking-  Fund : — The  proper  officers  are  required  to 
provide  a  sinking  fund  by  the  levy  of  a  tax  therefor  for  the 


KANSAS — BONDS   FOR   CITY   WATER   WORKS.  215 

redemption  of  such  bonds  at  maturity.  In  case  the  bonds  are 
issued  for  twenty  years  or  less,  there  shall  be  levied  a  sufficient 
tax  to  equal  the  amount  of  such  bonds  divided  by  the  number 
of  years  which  they  are  to  run.  If  they  are  issued  for  more 
than  twenty  years,  it  shall  not  be  necessary  to  levy  a  tax  for 
such  sinking  fund  until  the  twenty  years  prior  to  maturity, 
after  which  there  shall  be  levied  one-twentieth  of  the  principal 
amount  of  such  bonds  each  year  to  provide  such  sinking  fund. 
The  officers  of  any  such  municipality  are  authorized  to  issue 
installment  bonds  running  thirty  years,  with  coupons  attached, 
for  semi-annual  interest,  and  each  such  coupon  shall,  after  five 
years  from  date,  represent  one-fiftieth  of  the  principal,  the 
amount  to  be  shown  separately  thereon,  and  the  bond  to  show 
upon  its  face  that  its  principal  is  included  in  such  coupons. 
(Id.;  lyaws  1879,  chap.  50.) 

75.  Water-works  in  Cities: — Cities  of  the  first,  second 
and  third  classes  in  this  state  are  authorized  to  contract  for 
and   procure  water- works  to    be  -  constructed  for  the   purpose 
of  supplying  the  inhabitants  of  such  cities  with  water  for  do- 
mestic use,  the  extinguishing  of  fires,  and  for  manufacturing 
and  other  purposes. 

76.  Bonds   may    be  issued: — To  defray  the  cost  of  such 
water- works,  the  council  may  issue  the  bonds  of  the  city,  the 
interest  on  the  amount  not  to  exceed  one  per  cent  of  the  tax- 
able valuation  thereof,  as  shown  by  the  last  preceding  assess- 
ment.    The  bonds  shall  bear  interest  at  not  exceeding  eight 
per  cent  per  annum,  be  payable  at  such  time  and  place  as  the 
council  may  direct,  be  signed  by  the  mayor  of  the  city,  and 
countersigned  by  the  clerk  thereof,  and  have  interest  coupons 
attached. 

77.  Question  must  be  submitted: — Before  any  of  such  bonds 
shall  be  issued  the  council  shall  submit  the  question  of  such 
issue  to  the  electors  of  the  city  at  any  general,  or  a  special 
election  to  be  called  for  that  purpose  by  the  council,  of  which 
election  at  least  twenty  days'  notice  shall  be  given  by  publica- 
tion   in    at    least   one    newspaper    published    in   said   city. 


2l6  KANSAS — RAILROAD   AID    BONDS. 

If  authorized  by  such  election,  the  council  may  issue  the  bonds 
as  it  may  deem  advisable  to  secure  the  erection  and  opera- 
tion of  said  water-works.  (Chap.  115  b;  Act  of  1872.) 

78.  Railroad  Aid  Bonds; — Whenever  two-fifths  of  the 
resident  tax-payers  of  any  county  or  municipal  township,  shall 
petition  in  writing  to  the  board  of  county  commissioners;  or 
whenever  two-fifths  of  the  resident  tax-payers  of  any  incorpor- 
ated city  shall  petition  the  mayor  and  council  thereof,  to  sub- 
mit to  the  qualified  electors  of  such  county,  township  or  city, 
a  proposition  to  subscribe  to  the  capital  stock  of,  or  loan  the 
credit  of  any  such  county,  township  or  city,  to  any  railroad 
company  proposing  to  construct  a  railroad  through  or  into 
such  county,  township  or  city,  the  county  commissioners  for 
such  county,  or  township,  or  the  mayor  and  council  for  such 
city,  shall  cause  an  election  to  be  held  to  determine  whether 
such  subscription  or  loan  shall  be  made.     The  petition  shall 
specify  the  railroad  company,  amount  of  stock  proposed  to  be 
taken,  the  amount  for  which  it  is  proposed  to  loan  the  credit 
of  such  county,  township  or  city,  the  terms  of  payment,  the 
conditions  of  the  proposed  subscription  or  loan,  and  the  form 
of  the  ballots  to  be  used  at  such  election. 

79.  Company    to    deposit   expenses — Election — How  called 
and  held: — Before  an  election  shall  be  called  in  any  such  coun- 
ty, township  or  city,  under  the  provisions  of  this  or  any  similar 
law  of  this  state,  to  vote  aid,  or  to  subscribe  to  the  capital 
stock  of,  or  issue  bonds  to  any  railroad  company,  a  sum  suffi- 
cient to  secure  and  pay  the  expenses  of  such  election  shall  be 
deposited  with,  or  secured  to  such  county  commissioners  by 
such  company.     The   county  commissioners  for  such  county 
or  township,  or  the   mayor  and  council  for  such  city,  upon 
presentation   of  the    foregoing   petition  with   any   conditions 
deemed  advisable  by  such  authorities,  shall  convene,  and  make 
an  order  embracing  the  terms  and  conditions  set  forth  in  the  peti- 
tion, and  fix  a  time  for  holding  such  election  within  sixty 
days  from  the  date  on  which  the  commissioners   or  council 
shall  convene.     Thirty  days'  notice  of  such  election  shall  be 


KANSAS — RAILROAD  AID   BONDS.  217 

given  in  some  newspaper  published  or  having  a  general  cir- 
culation in  such  county,  township  or  city.  A  second  election  for 
such  purpose  shall  not  be  held  unless  upon  the  petition  of  a 
majority  of  the  qualified  voters  of  such  county,  township  or 
city. 

80.  Limit  of  Amount — How  Issued: — No    county  shall 
issue  of  such  bonds  more  than  one  hundred  thousand,  and  no 
township  more  than  fifteen  thousand  dollars,  with,  in  each  case, 
five    per  cent  additional  of  the    assessed  valuation  of  such 
county  or  township.     In    no  case  shall  the  total  amount  of 
county,  township  and  city  aid  to  any  railroad  company  exceed 
two  thousand  dollars  per  mile  for  each  mile  of  railroad  con- 
structed in  such  county.     If  authorized  by  such  election,  the 
board  of  county  commissioners  in  behalf  of  such  county  or 
township,  or  the  mayor  and  council  in  behalf  of   such  city, 
shall  issue  the  bonds,  and  the  county  or  city  clerk  shall  make 
such    subscription  or  loan  in  the  name  of  the  county,  town- 
ship   or   city.     The  bonds  may  be  issued  in    denominations 
of  not  less  than  one  hundred  nor  more  than  one  thousand  dol- 
lars, and  when  issued  for  a  county  or  township  shall  be  signed 
by  the  chairman  of  the  county  board,    and   attested  by  the 
county  clerk  under  the  county  seal,  and  when  issued  for  a  city, 
shall  be  signed  by  the  mayor  and  attested  by  the  city  clerk 
under  the  city  seal.     No  such  bonds  shall  be  issued  until  such 
railroad  shall  be  completed  and  in  operation  through  the  county, 
township  or  city  voting  such  bonds,  or  to  such  point  as  may  be 
specified  in  the  proposition. 

81.  Stock  or  First  Mortgage  Bonds  to  be  given  by  Company: 
— Before  any  company  shall  receive  any  bonds  so  issued  for 
such  stock  said  company  shall  deliver  to  the  treasurer  of  such 
county,  township  or  city,  stock  in  said  road  equal  in  amount 
with  the  bonds  issued.     Before  any  such  bonds  in  the  nature 
of   a   loan   shall    be    delivered     to    it,     the   company    shall 
execute  and   deliver  to   the  proper  treasurer  first  mortgage 
bond  on  such  portions  of  its  road-bed  and  property  as  may  be 
specified  in  the  proposition  voted  upon,  which  mortgage  bond 


2l8  KANSAS — RAILROAD   AID    AND   OTHER    BONDS. 

shall  be  for  the  same  time  and  rate  as,  and  equal  in  amount, 
less  twenty  per  cent,  with  the  bonds  of  such  county,  township 
or  city. 

82.  Time  and  Place  of  Payment — Registration —  Tax: — All 
such  bonds  shall  be  made  payable  at  any  time  fixed  in  the  sub- 
mitted proposition,   not  exceeding  thirty  years,   at  the  fiscal 
agency  of  the  city  in  New  York,  and  shall  be  registered  in  the 
office  of  the  state  auditor.     It  is  made  the  duty  of  the  proper 
officers  to  levy  and  collect  the  necessary  taxes  to  pay  the  in- 
terest and  principal  of  such  bonds  as  they  mature.     The  cou- 
pons for  the  annual  installments  of  the  principal  and  interest 
shall  be  receivable  when  due  by  the  county  for  taxes  levied 
to  pay  the  same.     (Laws  of  1876,  chap.  107;  as  amended  by 
chap.  183,  Laws  of  1887.) 

83.  Bonds  to  Aid   Narrow-Gauge   Railroads  : — Any 
county,  township  or  city  may  issue  bonds  to  aid  in  the  con- 
struction of  a  narrow-gauge  road  to  the  extent  of  four  thousand 
dollars  per  mile.     Such  bonds  to  run  not  exceeding  twenty- 
five   years,  and   bear  interest   at  7  per  cent.     They  may  be 
exchanged  for  an  equal  amount  of  the  second  mortgage  bonds 
of  such  company  running  into  or  through  (or  within  five  miles 
of)  such  municipality.     The  issue  of  such  bonds  must  be  au- 
thorized by  a  majority  of  the  votes  cast  at  a  general  or  special 
election  held  for  the  purpose.     (Chap.  141,  Laws  of  1877). 

84.  Bonds  to  Encourage  Natural  Resources:1 — Any 
county  or  incorporated  city  of  the  second  or  third  class,  for  the 
purpose  of  encouraging  the  natural  resources  of  their  respective 
localities,  may  subscribe    to  the   capital    stock  of  companies 
organized  for  the  purpose  of  mining,  boring  for  coal  or  natural 
gas,  developing  or  using  the  same,  or  boring  for  artesian  wells 
upon  such  conditions  as  may  be  deemed  best  for  the  interest  of 
the  county  or  city,  by  the  county  board,  or  the  mayor  and 
council,  as  the  case  may  be,  and  issue  bonds  therefor. 

1  There  would  seem  to  be  some  question  as  to  whether  the  purposes 
named  in  this  act  are  sufficiently  public  to  authorize  the  issue  of  munic- 
ipal bonds,  but  we  are  not  aware  that  the  validity  of  the  act  has,  as  yet, 
been  judicially  passed  upon.  (See  Chap.  3  herein.) 


KANSAS — SUNDRY    MUNICIPAL   BONDS.  2IQ 

85.  Amount — How    Authorized: — No  such   subscription 
shall  exceed  fifteen  thousand  dollars  for  counties,  five  thousand 
dollars  for  cities  of  the  second  class,  and  three  thousand  dol- 
lars for  cities  of  the  third  class.     Such  subscription  shall  not 
be  made  until  a  majority  of  the  voters  of  the  county  or  city 
at  a  regular  or  special  election  shall  have  voted  in  favor  thereof. 
The  proposition  voted  upon  shall  state  the  amount  of  stock 
desired,    the   amount  of  bonds   to   be   issued,  and   for   what 
purpose. 

86.  How  Issued: — The  bonds  shall  be  issued  in  sums  of  not 
less  than  one  hundred  dollars  each,  payable  in  not  less  than 
one  nor  more  than  fifteen  years  and  bear  interest  at  a  rate  not 
to  exceed  seven  per  cent,  payable  semi-annually.     They  shall 
be  signed  by  the  chairman  of  the  board  of  county  commission- 
ers, and  attested  by  the  county  clerk,  or  signed  by  the  mayor  and 
attested  by  the  city  clerk,  as  the  case  may  be,  with  the  seal  of 
the  proper  board  or  city  attached,   and   the  coupons  shall  be 
signed  and  attested  in  like  manner.     The  bonds  shall  be  deliv- 
ered to  the  corporation  entitled  to  the  same,  as  authorized,  upon 
receipt  of  the  stock  of  such  corporation.     The  county  or  city 
issuing  said  bonds  are  required  to  levy  a  sufficient  tax  to  pay 
the  interest  and  provide  a  sinking  fund  to  pay  the  principal  as 
they  become  due.     (Chap.  114,  L,aws  of  1887.) 

87.  Redemption  of  Railroad  Aid  Bonds  : — All  bonds 
hereafter  issued  by   boards  of  county  commissioners  or  by 
incorporated  cities  to  railroad  corporations  shall  be  redeemable 
at  the  pleasure  of  the  authorities  issuing  them  any  time  after 
ten  years  from  the  date  of  their  issue.     It  is  the  duty  of  such 
authorities  to  redeem  outstanding  bonds  whenever  there  is 
sufficient  funds  on  hand  in  the  sinking  fund  for  the  redemption 
of  any  bonds.     Six  weeks'  notice  shall  be  given  by  publication 
in  the  official  state  paper  of  the  proposed  redemption,   and 
thirty  days  after  the  last  publication,  interest  on  the  bonds  called 
shall  cease.     Funds  for  the  payment  of  such  bonds  shall  be 
remitted  to  the  place  of  payment  within  fifteen  days  of  said  last 
publication.     (Chap.    77,  Laws  of   1887;    passed   March   16, 
1887.) 


220  KANSAS — I,OST   BONDS — FISCAL   AGENCY. 

88.  Bonds  to  be  Offered  to  School  Fund  Commis- 
sioners : — In  the  case  of  the  issue  of  any  bonds  which  the 
board  of  commissioners  of  the  state  permanent  school  fund  are 
authorized  to  purchase,  it  is  the  duty  of  the  municipal  author- 
ities issuing  such  bonds  to  sell  the  same  to  such  commissioners 
unless  a  better  price  is  obtainable  from  other  persons,  and  it  is 
unlawful  for  any  municipal  officers  to  sell  such  bonds  at  par  or 
less  without  having  first  offered  the  same  to  such  board  of  com- 
missioners.    Any  municipal  officer  who  shall  sell  such  bonds 
at  par  or  less,  with  the  interest  accrued  at  the  date  of  deliv- 
ery, without  giving  the  said  board  of  commissioners  an  oppor- 
tunity to  purchase  the  same,  shall  be  guilty  of  a  misdemeanor. 
(Chap.  58,  Laws  of  1887;  passed  March  5,  1887.) 

89.  Duplicates  of  Bonds  Lost  or  Destroyed  : — When- 
ever any  bond  or  a  warrant  shall  be  lost,  destroyed  or  so  muti- 
lated as  to  be  unfit  for  circulation,  a  duplicate  thereof  may  be 
issued  by  the  proper  authorities,  upon  the  filing  of  a  satisfac- 
tory indemnifying  bond  with  an  affidavit  of  the  facts,  and  the 
new  bond  so  issued  must  be  indorsed  on  its  face  as  a  duplicate 
and  a  record  of  such  issue  made,  showing  the  purposes,  dates, 
amounts   of  such   replaced  bonds,  together  with  the  date  of 
issuing  the  duplicate  and  the  names  of  the  persons  to  whom 
issued. 

90.  State    Fiscal   Agency : — The  governor,   secretary 
and  auditor  of  state  are  authorized  to  designate  some  bank  in 
the  city  of  New  York  as  a  state  agency  for  the  payment  of 
bonds  and  coupons  issued  by  the  state  of  Kansas  or  any  county, 
township,  city  or  school  district  therein,  which  are  by  their 
terms  made  payable  in  such  city  of  New  York.     Upon  the 
establishment  of  such  agency  it  is  the  duty  of  the  state  auditor 
to  publish  a  notice  of  the  same  in  some  newspaper  of  general 
circulation  in  such  city  of  New  York,  and  thereafter  such  bonds 
and  coupons,  by  their  terms  payable  at  any  bank  in  said  city, 
shall  be  paid  at  the  state  agency.     Such  agency  may  be  changed 
at  any  time  by  the  governor,  secretary  and  auditor  of  state, 
publication  of  such  change  to  be  made  in  the  same  way. 

91.  Payments,  How  Made  .-—It  is  the  duty  of  the  treas- 


KANSAS — STATE    FISCAL   AGENCY.  221 

urer  of  any  municipality  having  bonds  payable  in  such  city  to 
remit  to  the  said  state  agency,  at  least  fifteen  days  before  the 
maturity  of  any  such  bonds  or  coupons,  sufficient  moneys  for 
their  redemption,  together  with  a  commission  not  to  exceed 
one-fourth  of  one  per  cent  for  the  disbursement  of  such  funds. 
Immediately  on  the  payment  of  any  such  bonds  or  coupons, 
they  shall  be  cancelled  and  returned  to  the  proper  officers  of 
the  municipality  entitled  to  the  same.  Any  treasurer  neglect- 
ing or  refusing  to  perform  the  duties  imposed  upon  him  by  this 
act,  is  made  liable  to  the  holder  of  any  such  bonds  or  coupons 
in  double  the  amount  thereof,  in  case  the  same  shall  be  dis- 
honored on  account  of  such  treasurer's  default.  (Chap.  42  a; 
passed  in  1874.) 


CHAPTER  XVII. 


ARKANSAS. 


References   are   to  Mansfield's  Statutes  of  1884,  except  as  otherwise 

indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  adopted  in  1874.^ 

1.  State  and  Municipal  Indebtedness: — Neither  the 
state  nor  any  city,  county,  town  or  other  municipality  therein,, 
shall  ever  loan  its  credit  for  any  purpose  whatever,  nor  shall 
any  county,  city,  town  or  other  municipality  ever  issue  any 
interest-bearing  evidences  of  indebtedness,  except  such  bonds 
as  may  be  authorized  by  law  to  provide  for  and  secure  the  pay- 
ment of  the  present  existing  indebtedness,  and  the  state  shall 
never  issue  any   interest  bearing   treasury   warrant  or   scrip. 
(Art.  1 6,  sec.   i.) 

2.  State  Credit: — The  state  is  prohibited  from  assuming 
or  paying  the  debts  or  other  liabilities  of  any  county,  town,  city 
or  other  corporation,  unless  such    debt  was    created  to  repel 
invasion,  suppress  insurrection,   or  to  provide  for  the  public 
welfare.     (Art.  12,   sec.  12.) 

3.  Municipal  Aid  or  Credit : — No  county,  city,  town 
or  other  municipal  corporation  shall  be  a  stockholder  in  any 
company,  association  or  corporation,  or  obtain  or  appropriate 
money  for,  or  loan  its  credit  to,  any  corporation,  association, 
institution  or  individual.     (Id.,  sec.  5.) 

4.  Special  Acts: — The  general  assembly  shall  pass  no 
special  act  conferring  corporate  powers,  except  for  charitable, 

1  An  act  was  passed  April  4,  1887  (No.  141),  providing  for  the  sub- 
mission at  the  next  general  election  of  the  question  of  holding  a  con- 
vention to  frame  a  new  constitution. 

(222) 


ARKANSAS — COUNTY    BONDS.  223 

educational,  penal  or  reformatory  purposes,  where  the  corpor- 
ations created  are  to  be,  and  remain,  under  the  patronage  and 
control  of  the  state. :  The  general  assembly  shall  provide  by 
general  laws  for  the  organization  of  cities  (which  may  be 
classified)  and  incorporated  towns,  and  restrict  their  powers 
of  taxation,  assessment,  borrowing  money,  and  contracting 
debts,  so  as  to  prevent  the  abuse  of  such  power.  (Id.,  sees.  2 
and  3.) 

5.  Tax    Limit : — No    municipal    corporation    shall    be 
authorized  to  pass  any  laws  contrary  to  the  general  laws  of  the 
state,  nor  levy  any  taxes  exceeding  in  one  year  five  mills  on  the 
dollar,  provided,  to  pay  indebtedness  existing  at  the  time  of  the 
adoption  of  the  constitution,  an  additional   tax  of  not  more 
than  five  mills  can  be  levied.     Taxation  for  state  purposes  is 
limited  to  one  per  cent,  and  for  county  purposes  to  one- half 
per  cent  for  any  one  year.     (Art.  12,  sec.  4;  and  art.  16,  sees.  8 
and  9.) 

COUNTIES. 

6.  County  Court : — The  county  court  is  invested  with 
the  control  and  management  of  all  county  property,  funds  and 
business,  including  all  matters  relating  to  county  taxes,  roads, 
bridges,  ferries  and  the  disbursements  of  money  for  county 
purposes,  or  that  may  be  necessary  for  the  internal  improve- 
ment and  local  concerns  of  the  county.     In  levying  taxes  and 
making  appropriations  for  county  purposes,  the  justices  of  the 
peace  of  the  county  sit  with  the  county  judge.     Their  regular 
annual  session   for  this  purpose  is  held  the  first  Monday  of 
July.     (Art.  7  Const.,  sec.  28  to  30;  and  sees.   1407,  1443  et. 
seq.,  of  Statutes.) 

7.  County  Funding  Bonds: — The  county  court  of  any 
county  is  authorized  to  issue  county  bonds  in  lieu  of  any  out- 
standing bonds  or  coupons,  on  such  terms  as  may  be  agreed 
upon  with  the  holders  thereof.     Similar  bonds  may  be  issued 
by  any  county  for  the  purpose  of  acquiring  and  extinguishing 
said  county's  portion  of  the  indebtedness  of  the  county  or 

1  See  City  of  Uttle  Rock  v.  Parish,  36  Ark.,  166  (1880),  and  pp.  40- 
42,  herein. 


224  ARKANSAS — COUNTY    BONDS — CITIES. 

counties  out  of  whose  territory  said  county  may  have  been 
formed.  The  county  court  shall  decide  as  to  the  issue  of  such 
bonds  and  may  make  an  order  to  that  effect,  providing  for  the 
presentation  of  such  outstanding  bonds  for  funding. 

8.  How  Issued —  Taxes: — Said  bonds  shall  be  payable  in 
not  less  than  five,  nor  more  than  thirty  years,  and  bear  interest 
from  date  at  six  per  cent  per  annum,  payable  annually,  on  the 
first  day  of  July  in  each  year,  to  be  evidenced  by  coupons 
attached.     They  shall  be  issued  in  denominations  of  not  less 
than  twenty-five  dollars.     It  is  made  the  duty  of  the  county 
court  to  levy  a  special  tax  for  the  payment  of  such  bonds  and 
interest  thereon.       Reference  is  made  to  the  statute  for  further 
particulars  relating  to  the  issue  of  these  bonds.     (Sees.  1078, 
to  1088,  as  amended  by  Act  153  in  1887.) 

9.  Compromise    Bonds : — Counties  are  authorized  to 
issue  bonds  to  compromise  and  in  lieu  of  indebtedness  existing 
at  the  adoption  of  the  present  constitution,  evidenced  by  bonds, 
judgments  or  otherwise.     Said  bonds  may  be  issued  upon  such 
terms  as  may  be  agreed  upon  with  the  holders  of  such  indebt- 
edness, and  be  payable  in  not  less  than  twenty  years  nor  more 
than  thirty  years,  and  not  exceeding  in  amount  sixty  per  cent 
of   such   indebtedness.      They   shall   have    interest    coupons 
attached  for  the  annual  interest,  and  be  payable  at  such  place 
in  the  city  of  New  York  as  may  be  agreed  upon.     They  shall 
be  signed  by  the  county  judge  and  countersigned  by  the  county 
clerk,  with  the  seal  of  the  county  court  affixed.     The  coupons 
may  be  attested  by  the  signature  of  the  county  clerk.     The 
county  court  is  required  to  levy  a  special  tax  for  the  payment 
of  these  bonds.     (Act  151,  1887.) 

CITIES. 

10.  Classification  : — All  municipal  corporations  having 
over  five  thousand  inhabitants  are  cities  of  the  first  class;  all 
cities  having  over  two  thousand  five  hundred  and  less  than 
five  thousand  inhabitants  are  cities  of  the  second  class,  and  all 
other  municipal  corporations  are  known  as  incorporated  towns. 
(Sees.  722  to  730.) 


ARKANSAS — CITY    AXD    TOWN    BONDS.  225 

ii.  City  and  Town  Funding  Bonds: — Any  city  or 
town  council,  for  the  purpose  of  extending  the  time  of  payment 
of  any  indebtedness  existing  at  the  time  of  the  present  consti- 
tution, and  which,  from  the  limit  of  taxation  such  city  or  town 
is  unable  to  pay  at  maturity,  may  issue  bonds  of  such  city  or 
town  to  fund  said  debt,  or  borrow  money  so  as  to  change,  but 
not  to  increase  the  indebtedness;  in  such  amounts,  not  less  than 
fifty  dollars;  for  such  time,  not  less  than  ten  nor  more  than 
twenty  years;  and  at  such  rate  of  interest,  not  exceeding  ten 
per  cent  per  annum,  as  the  council  may  deem  proper.  A 
special  tax  is  required  to  be  levied  to  meet  the  payment  of  the 
bonds  so  issued.  (Sees.  897  to  899.) 


CHAPTER  XVIII. 


TEXAS. 


References  are  to  the  sections  in  the  Statutes  of  /£?<?,  except  as  otherwise 

indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Present  Constitution  adopted  in  1876. 

1.  State    Credit: — The   legislature   is   prohibited  from 
giving  or  lending  the  credit  of  the  state  in  aid  of  any  person, 
association  or  corporation,   municipal  or  otherwise.     (Art.  3, 
sec.  50.) 

2.  State  Indebtedness  : — An  indebtedness  may  be  cre- 
ated  in  behalf  of  the  state,  not  exceeding  in  the  aggregate 
two   hundred   thousand   dollars   at   any  one  time,  to  supply 
casual  deficiencies  in  the  revenue.     (Art.  3,  sec.  49.) 

3.  Municipal  Credit : — The  legislature  cannot  authorize 
any  county,  city,  town  or  other  political  corporation  or  sub-di- 
vision of  the  state  to  loan  its  credit  to  or  to  grant  any  public 
money  or  other  thing  of  value  to  any  individual  association  or 
corporation,  or  to  become  a  stockholder  in  any  such  corpor- 
ation,   association   or   company.      No   county,   city   or  other 
municipal  corporation  shall  become  a  subscriber  to  the  capital 
stock  of  any  private  corporation  or  association  or  make  any 
appropriation  or  donation  or  otherwise  loan  its  credit  to  the 
same.     (Art.  3,  sec.  52.) 

4.  Municipal     Indebtedness :  —  Counties     and    cities 
bordering  on  the  coast  of  the  Gulf  of  Mexico  may,  by  a  vote 
of  two-thirds  of  the  tax-payers,  issue  bonds  for  the  construc- 
tion  of    sea-walls,    breakwaters,    and    for    sanitary    purposes 
authorized   by   law.     But  no  debt  for  any  purpose  shall  be 

incurred  in  any  manner  by  any  city  or  county  unless  provision 

(226) 


TEXAS   COUNTY  BONDS.  22y 

is  made  at  the  same  time  for  an  annual  tax  sufficient  to  pay  the 
interest  thereon  and  create  a  sinking  fund  of  at  least  two  per 
cent.  (Art.  u,  sees.  5  and  7.) 

5.  Limit  of  Taxation  ; — The  state  tax  on  property  shall 
never  exceed  fifty  cents  on  the  one  hundred  dollars  valuation, 
and  no  county,   town  or  city  (except  cities  having  over  ten 
thousand  inhabitants)  shall  levy  more  than  one  half  of  said 
state  tax.1     (Art.  9,  sec.  9.) 

COUNTIES.-  ^ 

6.  County  •  Government : — The  management  and  control 
of  county  affairs  are  vested  in  the  commissioners'  court,  com- 
posed of  four  elected  commissioners,  acting  with  the  county 
judge.     Sessions  of  this  court  are  held  on  the  first  Mondays  in 
February,  May,  August  and  November  in  each  year.     Special 
meetings  may  be  called  by  the  judge  or  any  three  commission- 
ers.    The  clerk  of  the  count}-  court  is    exofficio  clerk  of  the 
commissioners'  court.     (1509-1530.) 

7.  Bonds  for  tourthouse  and  Jail: — For  the  purpose 
of  erecting  a  suitable  courthouse  or  jail,   or  both,  the  county 
commissioners'  court  may  issue  county  bonds,  bearing  not  to 
exceed  eight  per  cent  interest,  and  running  not  more  than  fif- 
teen years,  redeemable  at  the  pleasure  of  the  county;  but  in 
counties  having  outstanding  railroad  aid  bonds,  said  court- 
house and  jail  bonds  may  run  not  to  exceed  twenty-five  years. 
(Laws  1885,  page  56-57,  986  a.) 

8.  Bonds  for  Bridges: — For  the  purpose  of  purchasing 
or  constructing  bridges  for  the  public  use  within  a  county,  the 
county  commissioners'  court  are  authorized  to  issue  bonds  of  the 
county,  running  not  exceeding  twenty  years,  and  bearing  not 
exceeding  eight  per  cent  interest.  They  are  required  to  levy 
sufficient  tax  to  pay  accruing  interest  and  to  create  a  sinking 

1  Any  act  authorizing  the  issue  of  bonds  is  limited  by  the  above 
provision  as  to  taxation,  and  in  a  case  where  the  legislature  had  already 
levied  a  tax  of  one-fourth  of  one  per  cent  for  current  expenses,  the  city 
council  had  no  power  to  levy  a  tax  for  the  payment  of  bonds,  and  a  con- 
tract for  the  issue  of  such  bonds  to  be  paid  for  by  taxation  was  declared 
void,  and  the  city  not  liable  for  the  payment  of  s'uch  bonds  and  coupons. 
Gould  vs.  The  City  of  Paris,  43  S.  W.  Rep.,  650  (1887 ). 

2  Also  see  under  "  General,"  \\  17-20. 


228  TEXAS — COUNTY    BONDS — CITY    BONDS. 

fund  of  not  less  than  four  per  cent  thereof  annually  to  redeem 
such  bonds  at  maturity.  The  bonds  shall  not  be  sold  at  less 
than  par  and  shall  be  registered  by  the  county  treasurer,  and  the 
interest  thereon  shall  be  paid  annually  on  the  tenth  of  April. 
g.  Limitation — Form: — Counties  already  in  debt  shall 
not  issue  bonds  exceeding  the  amount  which  a  tax  of  ten  cents 
on  the  one  hundred  dollars  valuation  will  not  liquidate  in  ten 
years,  and  counties  not  in  debt  to  an  amount  exceeding  which 
the  same  tax  will  not  liquidate  in  twenty  years.  The  said 
bonds  shall  be  signed  by  the  county  judge  and  countersigned 
by  the  county  clerk.  (Laws  1887,  page  135;  in  force  April 
4,  1887,  986  d.) 

10.  Funding  Bonds: — In  counties  with  courthouse  and 
jail  bonds  or  other  bonded  indebtedness  outstanding  prior  to 
the  constitution   of  1876,  the  commissioners'  court,   with   the 
consent  of  the  holders  of  such  outstanding  bonds,  may  issue  in 
exchange  therefor  new  bonds  with  interest  and  principal  pay- 
able at  such  times  and  places  as  may  be  agreed  upon  with  the 
holders  of  the  majority  of  the  outstanding  bonds.     Such  new 
bonds  shall  be  redeemable  after  two  years  at  the  option  of  the 
county,  and   the   interest   on   the   indebtedness   must   not  be 
increased.     An  annual  ad  valorem  tax  of  twenty-five  cents  on 
the  hundred  dollars  shall  be  levied  to  pay  the  interest  on  such 
bonds  and  to  provide  a  sinking  fund  for  the  payment  thereof. 
(Laws  of  1879,  chap.  46,  986  e.) 

11.  Same  : — Any  county  may  fund  its  bonded  indebted- 
ness, incurred  prior  to  April  18,  1876,  with  new  bonds  in  denom- 
inations of  not  less  than  five  hundred  dollars,  payable  in  twenty 
years  from  date,  and  bearing  interest  at  a  rate  not  to  exceed 
six  per  cent.     Said  bonds  shall  not  be  sold  or  exchanged  at 
less  than  par  and  accrued  interest.     (Laws  1881,  page  117.) 

CITY  AND  TOWN  BONDS.' 

12.  Funding    Bonds: — The    council  of  any  city  may 
fund  its  outstanding  indebtedness  by  issuing  bonds  therefor, 
bearing  not  to  exceed  ten  per  cent  interest,  and  shall  provide  by 

1  Also  see  under  "General"  \\  16-20,  and  note  p.  231. 


TEXAS — CITY    BOXDS.  22Q 

ordinance  for  issuing  bonds  in  such  sums  as  have  been  or 
may  be  agreed  upon  for  any  authorized  railroad  subsidies.  Any 
city  may  issue  city  bonds  to  improve  public  markets  and 
streets,  erect  and  conduct  hospitals,  city  halls,  water-works  and 
other  authorized  municipal  purposes.  The  bonds  shall  be 
issued  in  such  sums  as  may  be  determined  by  the  council,  and 
bear  interest  at  a  rate  not  to  exceed  ten  per  cent,  payable  semi- 
annually,  at  such  place  as  may  be  named  in  the  ordinance. 
(419-420.) 

13.  Limitation — Form: — The  aggregate   amount   issued 
by  the  council  of  any  city  shall  not  at  any  time  exceed  six  per 
cent  of  the  value  of  the  property  of  such  city  subject  to  ad 
valorem  tax.     All  bonds  shall  specify  for  what  purpose  they 
are  issued,  and  shall  be  signed  by  the  mayor  and  counter- 
signed by  the  secretary,  and  payable  at  such  times  and  places 
as  may  be  fixed  by  the  ordinance,  in  not  less  than  ten  nor 
more  than  fifty  year  from  date.     (420  to  422. ) 

14.  Registration  : — The  mayor  shall  forward  the  bonds  to 
the  state  comptroller,  who  is  required  to  register  them  in  a 
book  kept  for  the  purpose,  and  indorse  on  each  bond  his  cer- 
tificate of  registration,   and  at  the  request  of  the  rc^or,  the 
comptroller  shall  furnish  a  certificate  stating  the  amount  of 
bonds  of  such  municipality  so  registered  in  his  office  to  date. 
The  mayor  is  required,  at  the  time  of  forwarding  such  bonds, 
to  furnish  the  comptroller  with  a  statement  of  the  city's  taxa- 
ble property  and  the  amount  of  tax  levied  to  meet  the  interest 
and  create  a  sinking  fund  for  the  payment  of  said  bonds.     It 
is  made  the  comptroller's  duty  to  see  that  a  tax  is  levied  suffi- 
cient to  pay  the  interest  semi-annually  as  it  accrues,  and  to  pro- 
vide a  sinking  fund  to  pay  the  principal  thereof  at  maturity, 
and  also  to  see  that  such  sinking  fund  is  invested  in  good  secu- 
rities.    (423-424.) 

15.  Bonds  for  Harbors  : — The  municipal  authorities  of 
Gulf  cities  may  issue  bonds  in  such  amount  as  may  be  neces- 
sary, not  exceeding  the  limit  in  the  city's  charter,  to  improve 
harbors  or  remove  bars  at  the  entrance  thereof.     Said  bonds 
shall  bear  interest  not  exceeding  five  per  cent,  payable  semi- 


230  TEXAS — FUNDING    BONDS. 

annually,  and  be  sold  at  not  lest  than  par.     (Laws  of  1883, 
page  48,  425   d.) 

16.  Funding  Bonds  : — The  mayor  and  board  of  aldermen 
of  any  city  or  town  may,  by  ordinance  or  resolution  adopting 
this  act,  compromise  and  fund  existing  indebtedness  by  issuing 
new  bonds  in  denominations  of  not  less  than  fifty  nor  more 
than    one  thousand   dollars,    running  not  longer  than  thirty 
years,  bearing  interest  at  a  rate  not  exceeding  six  per  cent,  as 
evidenced  by  coupons,  payable  semi-annually.     No  debt  barred 
by  the  statute  of  limitation  shall  be  funded.     City  bonds  shall 
be  signed  by  the  mayor  and  attested  by  the  secretary,  or  if 
there  is  none,  by  the  recorder,  under  the  corporate  seal,  and 
shall  be  registered  with  the  state  comptroller  and  sold  at  not 
less  than  par.     No  defense  to  the  new  bonds  shall  be  made, 
except  such  as  originated  subsequent  to  issue.     (Laws    1887, 
PP-  50-53.    986  h.) 

GENERAL. 

17.  Funding  Bonds  : — Counties,  incorporated  cities  and 
towns  having  outstanding  indebtedness   (other  than  railroad 
aid  or  internal  improvement  bonds  issued  under  laws  of  1871) 
incurred  prior   to   April  18,    1876,    may   compromise,    adjust 
or  scale  the  same,  and  issue  therefor  new  bonds  bearing  inter- 
est at  a  rate  not  to  exceed  six  per  cent,   but  cities  shall  not 
issue  bonds  to  exceed  their  chartered  limitation.     (Laws  of 
1879,  chap.  54,  986  g.) 

18.  Compromise  Bonds1 : — Counties,  cities  and  towns 
may  compromise  and  adjust  an)^  outstanding  bonds  issued  to 
aid  railroads  or  other  internal  improvements  and  issue  new 
bonds  therefor,  providing  the  amount  of  debt  and  the  rate  of 
interest  shall  not  be  increased,   nor  shall  any  debt  barred  by 
the  statute  of  limitations  be  revived.     Said  bonds  shall  be  in 
denomination  of  not  less  than  one  hundred  dollars  nor  more 
than  one  thousand  dollars,  and  may  be  sold  or  exchanged  for 
such  outstanding  bonds  at  not  more  than  par.     They  shall  not 

1  Chap.  105  of  the  Laws  of  1879  provides  for  the  issue  of  compro- 
mise bonds  to  fund  the  "existing  bonded  indebtedness"  of  counties, 
cities  and  towns. 


TEXAS — FUNDING    BONDS.  23! 

be  sold  until  a  contract  for  the  settlement  or  payment  of  the 
old  bonds  has  been  made,  nor  at  a  price  less  than  the  amount 
required  to  take  up  such  old  bonds. 

19.  How  Issued: — When  arrangements  have  been  made, 
the  commissioner's  court,  or  the  city  or  town  council,  as  the 
case  may  be,  shall  enter  an  order,  or  adopt  an  ordinance  author- 
izing such  issue  and  prescribing  the  amount,  and  cause  the 
bonds  to  be  prepared,  payable  to  bearer,  at  such  time  as  may 
be  agreed  upon,  not  exceeding  fifty  years,  and  such  a  rate  of 
interest  not  exceeding  the  rate  of  the  old  bonds,  payable  annu- 
ally or  semi-annually,  as  may  be  agreed,  to  be  evidenced  by 
coupons  attached.  County  bonds  shall  be  signed  by  the  county 
judge  and  attested  by  the  county  clerk,  with  the  seal  of  the 
county  attached,  and  the  coupons  shall  be  signed  by  the  county 
judge.  City  or  town  bonds  shall  be  signed  by  the  mayor 
and  attested  by  the  secretary  or  recorder  of  the  city  or  town 
with  the  corporate  seal  attached,  and  the  coupons  shall  be 
signed  by  the  mayor. 

20.  Tax — Registration: — An  irrepealable  tax  shall  be 
levied  sufficient  to  meet  the  accruing  interest  and  to  create  a 
sinking  fund  of  not  less  than  two  per  cent.  The  bonds  must  be 
registered  with  the  state  comptroller  who  shall  indorse  on  each 
bond  a  certificate  showing  the  date  of  registration.  Said  bonds 
shall  not  thereafter  be  open  to  any  defense  existing  prior  to 
delivery,  and  they  shall  contain  a  statement  to  that  effect  on 
their  face.  (Laws  of  1887,  pp.  77  to  79,  986k.) 

NOTE. — Cities  and  towns  incorporated  under  general  laws  may  also, 
under  acts  of  1887,  page  37,  in  anticipation  of  taxes  to  be  levied  for  pub- 
lic buildings,  water-works,  sewers,  street  and  other  permanent  improve- 
ments, issue  bonds  bearing  not  to  exceed  six  per  cent,  to  an  amount 
which  a  tax  of  one-fourth  per  cent  will  pay  interest  and  principal  at 
maturity.  (425  c.) 


CHAPTER  XIX. 


COLORADO. 


References  are  to  the  sections  in  the  General  Statutes  of  1883,    except 
as  otherwise  indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  adopted  July  /,  1876. 

1.  State  and  Municipal  Credit : — Neither  the  state  nor 
any  county,   city,   township   or  school   district  shall  lend  or 
pledge  its  credit  in  any  manner  to,  or  in  aid  of  any  person, 
company  or  corporation,  nor  make  any  donation  or  grant  to,  or 
in  aid  of,  or  become  a  subscriber  to,  or  a  shareholder  in,  any  such 
corporation  or  company,   or  a  joint  owner  with  any  person, 
company  or  corporation,  except  such  interest  as  may  result 
from  any  donation  or  devise  for  public  use  or  by  escheat  or 
forfeiture  by  operation  or  provision  of  law.     (Art.  n,  sees, 
i  and  2.) 

2.  County   Indebtedness : — No  county  shall  contract 
any  debt  by  loan  except  for  the  purpose  of  erecting  necessary 
public  buildings  and  making  or  repairing  public  roads  and 
bridges;  and  such  indebtedness  contracted  in  any  one  year  shall 
not  exceed,  in  counties  having  an  assessed  valuation  of  taxable 
property  exceeding  five  millions  of  dollars,  one  dollar  and  fifty 
cents  on  each  one  thousand  dollars  thereof;  in  counties  having 
an  assessed  valuation  of  less  than  five  millions  of  dollars,  three 
dollars  on  each  one  thousand  dollars  thereof;  and  the  aggre- 
gate amount  of  indebtedness  of  any  county  for  all  purposes, 
exclusive  of  debts  contracted  before  the  adoption  of  the  present 
constitution,  shall  not  at  any  time  exceed  twice  the  amount 
above  limited,  unless,  in  manner  provided  by  law,  at  a  general 
election,  the  question  of  incurring  such  debt  shall  be  submitted 

(232) 


COLORADO — CONSTITUTIONAL    LIMITATIONS.  233 

to  and  approved  by  a  majority  vote  of  such  of  the  qualified 
electors  as  shall  have  paid  a  property  tax  in  the  year  last 
preceding  such  election.  Such  bonds,  if  issued,  shall  run  not 
less  than  ten  years,  and  the  aggregate  amount  of  debt  so 
contracted  shall  not  at  any  time  exceed  twice  the  rate  upon  the 
valuation  last  herein  mentioned,  provided  that  this  section  shall 
not  apply  to  counties  having  a  valuation  of  less  than  one 
million  dollars.1  (Art.  n,  sec.  6.) 

3.  School  District  Indebtedness  : — No  debt  by  loan, 
in  any  form,  shall  be  contracted  by  any  school  district  for  the 
purpose  of  erecting  and  furnishing  school  buildings  or  pur- 
chasing grounds,  unless  a  proposition  to  create  such  debt  shall 
first  be  submitted  to  and  approved  by  a  majority  vote  of  the 
qualified  electors  of  such  district  as  shall  have  paid  a  school 
tax  therein  in  the  year  next  preceding  such  election.     (Art.  1 1, 
sec.  7.) 

4.  City  and  Town  Indebtedness : — No  city  or  town 
shall  contract  any  debt  by  loan,  except  by  means  of  an  ordi- 
nance, which  shall  be  irrepealable  until  the  full  payment  of  the 
indebtedness  therein  provided,  specifying  the  purpose  of  the 
loan  and  providing  for  the  levy  of  a  tax,  not  exceeding  twelve 
mills  on  each  dollar  of  taxable  property  valuation,  sufficient  to 
pay  the  annual  interest  and  the  principal  of  such  debt  within 
fifteen,  but  not  less  than  ten  years,  from  the  creation  thereof; 
and  such  tax,  when  collected,  shall  be  applied  only  for  the 
purposes  specified.     The  question  of  incurring  said  debt  must 
be  submitted  at  a  regular  election  for  councilmen,  aldermen,  or 
officers  of  such  city  or  town,  to  a  vote  of  such  qualified  electors 
thereof  as  shall  in   the  year  next   preceding  have  paid  a 
property  tax  therein,   and  a  majority  vote  of  those  voting 
thereon    is    required    to   authorize   such   indebtedness.     The 
aggregate  of  debt  so  created,  together  with  the  debt  existing 

1  That  is,  the  limitation  of  such,  county  indebtedness  in  counties 
having  not  less  than  one  million  nor  more  than  five  millions  of  assessed 
valuation  is,  for  each  one  thousand  dollars  of  such  valuation,  three 
dollars  for  any  one  year  without  a  vote,  six  dollars  for  any  one  year 
when  authorized  by  a  vote  as  provided,  and  twelve  dollars  in  the  aggre- 
gate at  any  one  time ;  and  in  counties  having  more  than  five  millions 
of  assessed  valuation,  one  half  of  such  sums  in  each  case,  respectively. 


234  COLORADO — COUNTY    BONDS. 

at  the  time  of  such  election,  shall  not  at  any  time  exceed 
three  per  cent  of  the  valuation  as  shown  by  the  last  previous 
assessment  in  such  city  or  town.  Debts  contracted  for  supply- 
ing water  to  such  city  or  town  are  excepted  from  the  operation 
of  this  section.  (Art.  n,  sec.  8.) 

COUNTIES. 

5.  County  Commissioners  : — There  shall  be  elected  in 
each  county,  for  a  term  of  three  years,   three  county  commis- 
sioners, two  of  whom  shall  constitute  a  quorum,  except  in 
counties  with  more  than  ten  thousand  population,  five  commis- 
sioners  shall   be   elected,   three   of  whom   shall  constitute  a 
quorum.     (Art.  14,  sec.  6.) 

6.  Bonds  for  Public  Buildings,  Roads  and  Bridges: — 
County  commissioners  by  an  order  entered  of  record,  specifying 
the  amount  and  object,  may  submit  to  a  vote  of  the  qualified 
tax-paying  electors,  at  a  general  election,  the  question  of  incur- 
ring a  debt  for  necessary  public  buildings,  or  making  or  repair- 
ing roads  or  bridges.     Notice  of  said  election  must  be  posted 
in  each   precinct  for  at   least  thirty  days  previously,  and  a 
majority  vote  is  necessary  to  adopt  the  question. 

7.  Limitation     of    Amount — Form: — The    limitation   is 
the  same  as  the  constitutional  limitation  on  county  indebted- 
ness.    The  bonds  issued  for  the  above  purpose  shall  be  payable 
at  the  pleasure  of  the  county  any  time  after  ten  years  from  date 
of  issue,  and  due  absolutely  in  twenty  years  from  date,   and 
shall  bear  interest  at  a  rate  not  to  exceed  ten  per  cent  per 
annum,  payable  April  first  of  each  year.     They  shall  be  signed 
by  the  chairman  and  attested  by  the  county  clerk  under  the 
county  seal,  and  be  issued  in  denominations  of  fifty  dollars, 
or  some  multiple  of  fifty,  and  both  principal  and  interest  shall 
be  payable  at  the  office  of  the  county  treasurer. 

8.  Sale — Tax: — Said  bonds  shall  be  sold  at  not  less  than 
fifteen  per  cent  discount.     It  is  made  the  duty  of  the  proper 
authorities  to  levy  a  sufficient  tax  to  pay  the  interest  on  said 
bonds,  and  after  ten  years  to  create  a  sinking  fund  to  discharge 
the  principal  thereof  at  maturity.     (67 1 . ) 

9.  Funding  Bonds: — In  counties  with  a  floating  indebt- 


COLORADO — COUNTY  FUNDING  BONDS.         235 

ness  exceeding  five  thousand  dollars,  on  petition  of  fifty  tax- 
paying  electors,  the  county  commissioners  shall  publish  for 
thirty  days  in  a  newspaper  within  the  county,  or  if  there  are 
none  so  published,  in  one  at  Denver,  a  notice  requesting  hold- 
ers of  county  warrants  to  submit,  within  sixty  days  from  the 
first  publication  of  such  notice,  a  proposition  to  exchange  said 
warrants  at  par  and  accrued  interest,  for  bonds  at  par.  There- 
upon at  the  next  general  election,  on  petition  of  fifty  tax-paying 
electors,  the  county  commissioners  shall  submit  to  a  vote  of 
the  tax-paying  electors  of  the  count}-,  the  question  of  funding 
such  indebtedness,  notice  of  the  submission  of  the  question 
shall  be  given  by  publication  in  some  newspaper  in  the  county, 
or  if  there  be  no  such  newspaper,  by  posting  in  two  public 
places  in  each  precinct,  thirty  days  before  such  election, 
a  notice  of  the  proposition,  including  a  statement  of  the  rate 
of  interest  on  the  proposed  bonds.  If  a  majority  of  tax-paying 
electors  voting  at  such  election,  vote  in  favor  of  the  proposi- 
tion, the  county  commissioners  may  issue  bonds  in  exchange 
for  such  warrants  or  may  sell  the  said  bonds  and  apply  the 
proceeds  to  the  payment  of  such  warrants. 

10.  Limitation — Form — Execution: — The  amount  of  bonds 
so  issued  shall  not  exceed  the  county  indebtedness  at  the  time 
of  the  first  publication  above  mentioned.  The  bonds  shall  be 
issued  in  denomination  of  fifty  dollars,  or  some  multiple  thereof, 
bear  interest  at  a  rate  not  to  exceed  seven  per  cent,  payable  at 
the  pleasure  of  the  county  any  time  after  ten  years,  or  abso- 
lutely in  twenty  years,  and  payable  in  New  York,  or  at  the 
office  of  the  county  treasurer,  at  the  option  of  the  holders 
thereof.  Each  bond  shall  state  on  its  face  the  amount,  to 
whom  issued,  and  date  of  issuance;  shall  be  signed  by  the 
chairman,  countersigned  by  the  county  treasurer  and  attested 
by  the  county  clerk  under  the  seal  of  the  county.  All  bonds 
so  issued  shall  be  registered  at  the  office  of  the  state  auditor. 
A  sufficient  tax  shall  be  levied  to  meet  the  half  yearly  interest 
as  it  accrues,  and  after  nine  years  to  create  a  sinking  fund  of 
ten  per  cent  per  annum  to  discharge  the  principal  at  maturity. 
(671  to  682,  as  amended  by  Laws  1885,  p.  232.) 


236  COLORADO — COUNTY,    CITY    AND    TOWN    BONDS. 

11.  Refunding  Bonds  : — In  counties  having  legal  out- 
standing railroad  aid  bonds  due,  maturing,  or  redeemable  at  the 
pleasure  of  the  county,  the  county  commissioners,   with  the 
consent  of  the  holders  of  such  bonds,  may  issue  new  bonds  in 
exchange  therefor  at   par,  to  an   amount  not  exceeding  the 
amount  of  such  outstanding  bonds,  or  the  commissioners  may 
sell  at  not  less  than  par,  such  new  bonds,  and  with  the  proceeds 
of  such  sale,  pay  the  outstanding  bonds.      The  issue  of  the 
new  bonds  must  first  be  authorized  by  a  majority  vote  of  the 
tax-paying  electors  voting  thereon  at  a  regular  or  special  elec- 
tion, as  provided  in  the  case  of  funding  bonds  above. 

12.  Form — Execution: — Said   bonds  shall  be  known  as 
"refunding  bonds,"  shall  bear  interest  at  a  rate  not  to  exceed 
eight  per  cent  per  annum,  be  redeemable  at  the  option  of  the 
county  after  ten  years,  and  due  in  twenty  years,  and  payable 
at  the  office  of  the  county  treasurer.     They  shall  be  signed  by 
the  chairman,  countersigned  by  the  treasurer,  and  attested  by 
the  clerk  under  the  seal  of  the  county,  and  shall  state  on  their 
face  the  amount,  to  whom  issued,  and  date  of  issuance.     They 
must  be  registered  with  the  state  auditor,  who  shall  indorse 
thereon  his  certificate  under  his  official  seal.     A  tax  must  be 
levied  as  in  the  case  of  funding  bonds.     (124-128.) 

CITIES  AND  TOWNS. 

13.  City  and  Town  Bonds  : — The  city  council  or  the 
board  of  trustees  in  towns  are  authorized  by  ordinance  to  issue 
bonds   of  their   respective  municipalities  for  the  purpose  of 
erecting  public  buildings,   constructing  sewers,  water-works, 
canals  for  irrigating  purposes,  and  gas-works.     But  the  issue 
of  such  bonds  (except  for  water  supply)  must  first  be  author- 
ized  by   a   majority   vote  of  the  tax-paying  electors  voting 
thereon  at  a  regular  election.     The  amount  is  limited,  as  pro- 
vided by  constitution.     (3312.) 

14.  Funding  Bonds : — Any  city  or  town  is  authorized 
to  issue  funding  bonds,  as  provided  in  the  case  of  similar  bonds 
by  counties,  but  such  bonds  shall  be  made  payable  at  the 
pleasure  of  the  city  or  town  issuing  the  same,  any  time  after 


COLORADO — CITY,    TOWN   AND   SCHOOL    BONDS.  237 

five  years,  and  due  in  fifteen  years;  shall  be  signed  by  the 
mayor,  countersigned  by  the  treasurer,  and  attested  by  the 
clerk  or  recorder  under  the  city  or  town  seal  and  registered  by 
the  treasurer  of  the  city  or  town.  (3365  and  3785.) 

15.  "Water  Refunding  Bonds  : — Any  city  or  town  with 
outstanding  bonds  issued  for  water,  or  for  funding  such  bonds, 
may,  when  authorized  by  a  majority  vote  of  the  tax-paying 
electors,  refund  such  outstanding  bonds  with  new  bonds,  run- 
ning not  to  exceed  fifty  years.     The  amount  of  the  new  bonds 
must  not  exceed  the  amount  of  the  debt  refunded.     The  ordi- 
nance providing  for  the  issue  of  such  new  bonds  must  provide 
for  a  tax  to  meet  the  interest  as  it  accrues  and  to  pay  the  prin- 
cipal at  maturity,  and  shall  be  irrepealable.     The  purchaser  of 
such  bonds  shall  not  be  bound  by  any  misapplication  of  the 
proceeds  thereof  by  the  city  or  town.     (Laws  of  1887,  p.  436; 
approved  March  30,  1887.) 

SCHOOL  BONDS. 

16.  School  District  Bonds  : — The  board  of  directors  of 
any  school  district  may  issue  bonds  for  the  purpose  of  erecting 
school  buildings  or  funding  the  floating  debts  of  such  district, 
when  on  the  petition  of  twenty  legal  voters,  the  question  of 
bonding  the  district  has  been  submitted  by  the  secretary  of  the 
district  giving  twenty  days'  notice  before  any  regular  or  special 
meeting  of  such  submission,  and  the  same  has  been  authorized 
by  a  majority  vote  of  all  the  tax-paying  electors  voting  thereon 
at  such  meeting.     The  aggregate  amount  of  indebtedness  so 
contracted  in  behalf  of  any  district  shall  not  exceed  three  and 
a  half  per  cent  of  the  assessed  valuation  thereof. 

17.  Form  — Execution  —  Tax :  —  Said  bonds   shall   bear 
interest  at  a  rate  not  exceeding  eight  per  cent  per  annum, 
payable  semi-annually,  and  shall  be  redeemable  at  the  pleasure 
of  the  district  any  time  after  five  years,  and  payable  in  fifteen 
years  from  date  of  issue  at  the  office  of  the  county  treasurer. 
The  interest  may  be  made  payable  in  the  city  of  New  York. 
The  bonds  shall  be  signed  by  the  president  of  the  board  of 
directors,  countersigned  by  the  county  treasurer,  and  have  the 
seal  of  the  district  affixed,  and  shall  be  registered  by  the  county 


238  COLORADO — SCHOOL  BONDS. 

recorder.  They  must  state  the  act  under  which  they  are 
issued.  The  county  board  of  commissioners  shall  levy  a  tax 
on  the  property  of  the  district  to  pay  the  interest  on  such 
bonds,  and  after  five  years  to  provide  ten  per  cent  per  annum 
as  a  sinking  fund  to  discharge  the  principal  at  maturity.  (3085 
to  3092,  as  amended  by  L,aws  of  1887,  p.  404.) 

18.  Refunding  School  Bonds  : — The  board  of  directors 
of  any  district  may  refund  its  bonded  indebtedness,  with  the 
consent  of  the  holders  thereof,  by  issuing  new  bonds,  bearing 
a  less  rate  of  interest,  and  running  a  longer  time;  but  when  said 
outstanding  bonds  are  due,  the  said  board  may  issue  and  sell 
new  bonds  to  pay  such  maturing  bonds.     The  issue  of  the  new 
bonds  must  be  authorized  by  a  vote,  as  in  the  case  of  school 
district  bonds. 

19.  Form — Sale: — The   bonds   issued   for   this   purpose 
shall  bear  interest  at  a  rate  not  to  exceed  eight  per  cent,  be 
redeemable  at  the  pleasure  of  the  board  of  directors  in  not 
to  exceed  ten  years,  and  payable  in  not  to  exceed  twenty  years, 
and  the  date  after  which  they  are  made  redeemable  must  be 
plainly  written  or  printed  on  the  face  of  the  bonds.     Said 
bonds  can  not  be  sold  at  less  than  ninety-eight  per  cent  of  their 
par  value.     (Laws  of  1887,  P-  377-) 


CHAPTER  XX. 


PACIFIC  STATES. 


CALIFORNIA. 


References  are  to   the  Code  of  1885,  and  supplements  thereto,  except 
as  otherwise  indicated. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Present  Constitution  adopted  in  i8jg. 

1.  State  and  Municipal  Credit: — The  legislature  has 
no  power  to  give,  or  to  loan,  or  to  authorize  the  giving  or 
lending  the  credit  of  the  state,  or  of  any  county,  city,  town- 
ship, or  other  political  corporation  or  subdivision  of  the  state, 
in  aid  of,  or  to  any  person,  association  or  corporation,  munici- 
pal or  otherwise,  nor  to  authorize  the  state,  or  any  political 
subdivision  thereof,  to  subscribe  for  stock,  or  to   become   a 
stockholder  in  any  corporation  whatever.     (Art.  4,  sec.  31.) 

2.  Municipal  Indebtedness : — No  county,  city,  town, 
board  of  education,  or  school  district,  shall  incur  any  indebt- 
edness or  liability  in  any  manner,  for  any  purpose,  exceeding 
in  any  year  the  income  and  revenue  provided  for  it  for  such 
year,  without  the  assent  of  two-thirds  of  the  qualified  voters 
thereof,  voting  at  an  election  to  be  held  for  that  purpose,  and 
before,  or  at  the  time  of  incurring  such  indebtedness,  provision 
shall  be  made  for  the  collection  of  an  annual  tax  sufficient  to 
pay  the  interest    on  such  indebtedness  as  it  falls  due,  and 
also  to  constitute  a  sinking  fund  for  the  payment  of  the  prin- 
cipal thereof  within  twenty  years.     Any  indebtedness  or  liabil- 
ity incurred  contrary  to  this  provision  shall  be  void.     (Art.  1 1, 
sec.  18.) 

3.  Special   Legislation : — Corporations  for    municipal 

(239) 


240  CALIFORNIA — COUNTY    BONDS. 

purposes  shall  not  be  created  by  special  laws,  and  the  legisla- 
ture, by  general  laws,  is  required  to  provide  for  the  incorpora- 
tion, organization,  and  classification,  in  proportion  to  population 
of  cities  and  towns.  (Art.  n,sec.  36. ) 

COUNTIES.' 

4.  Board  of  Supervisors  : — The  powers  of  a  county  are 
exercised  by  a  board  of  five  supervisors,  of  which  board  the 
county  clerk  is  ex  officio  clerk.     Three  members  of  the  board 
constitute  a  quorum,  and  no  act  of  the  board  shall  be  valid  or 
binding  unles  three  of  the  members  concur  therein.     (County 
Govt.  Act  of  1883;  sees.  2,  13  and  in.) 

5.  Limitation  on  County  Indebtedness  : — No  county 
shall  in  any  manner  give  or  loan  its  credit  to,  or  in  aid  of  any 
person  or  corporation.     No  county  shall  incur  any  indebted- 
ness or  liability  for  any  purpose  exceeding  in  any  year  the 
income  and  revenue  provided  for  such  year,  without  the  assent 
of  two-thirds  of  the  qualified  electors  thereof  voting   at   an 
election  to  be  held  for  that  purpose,  nor  unless  upon,  or  at 
the  time,  of  incurring  such  indebtedness,  provision  shall  be 
made  for  the  collection  of  an  annual  tax  sufficient  to  pay  the 
interest  as  it  falls  due,  and  also  to  constitute  a  sinking  fund 
for  the  payment  of  the  principal  thereof,  within  twenty  years. 
Indebtedness  or  liability  incurred  contrary  to  this  provision 
shall  be  void.     (Co.  Govt.  Act  of  1885  ;  sec.  5.) 

6.  County  Bonds  ; — The  board  may  contract  a  bonded 
indebtedness,  by  making  an  order  specifying  the  particular 
purpose  for  which  the  indebtedness  is  to  be  created,  and  the 
amount  of  bonds  which  they  propose  to  issue.     They  shall 
provide  for  the  submission  of  the  question  to  the  qualified 
electors  of  the  county  at  the  next  general  election,  or  at  a 
special  election  to  be  called  by  the  board.     Notice  of  such 
election  shall  be  given  by  publication   in  some  newspaper 
published  therein  for  four  weeks  previously.     If  there  is  no 
such  newspaper,  the  notice  shall  be  posted  for  the  same  time  in 
each  election  precinct,  and  at  the  courthouse  door.     The  issue 

1  Also  see  §  25. 


CALIFORNIA — CITY    BOXDS. 


24I 


of  the  bonds  requires  a  majority  of  two-thirds  of  the  electors 
voting  thereon.  The  bonds  are  to  be  issued  substantially  as 
provided  under  a  previous  act  for  funding  county  indebted- 
ness,1 in  sums  of  not  less  than  one  hundred  nor  more  than 
one  thousand  dollars  each,  having  not  more  than  twenty 
years  to  run,  redeemable  at  the  pleasure  of  the  county,  bearing 
interest  not  exceeding  seven  per  cent,  payable  semi-annually, 
and  signed  by  the  chairman  of  the  board,  the  coupons  being 
signed  by  the  auditor.  (Id.,  sec.  37.) 

CITIES. 

7.  Classification  : — Any  municipal  corporation  having  a 
population  of  more  than  one  hundred  thousand  constitutes  a 
city  of  the  first  class;  those  having  more  than  thirty  thousand 
and  not  exceeding  one  hundred  thousand,  constitute  cities  of 
the  second  class;  those  having  more  than  fifteen  thousand  and 
not  exceeding  thirty  thousand,  are  cities  of  the  third  class;  those 
having   more   than   ten   thousand   and   not  exceeding  fifteen 
thousand,  are  cities  of  the  fourth  class;  those  having  more  than 
three  thousand  and  not  exceeding  ten  thousand,  are  cities  of  the 
fifth  class;  and  those  which  have  not  exceeding  three  thousand 
population  are  cities  of  the  sixth  class. 

8.  City  Bonds: — In  cities  of  the  second  and  third  classes, 
when  it  is  desired  to  incur  an  indebtedness  in  excess  of  the 
amount  in  the  municipal  treasury,  or  of  that  which  may  be 
otherwise  authorized,  the  council  is  required  to  submit  the 
question  at  a  special  election  called  for  the  purpose  by  three 
weeks'  published  notice.     The  notice  must  state  the  purpose 
and  amount  of  the  proposed  indebtedness,  and  no  other  ques- 
tion must  be  submitted  with  the  proposition.  •  If  two-thirds  of 
the  qualified  electors  voting  thereon  are  in  favor  of  the  propo- 
sition, the  council  may  create  such  indebtedness.      Provision 
must  be  made  by  ordinance  for  the  repayment  thereof  within 
twenty  years.      In  cities  of  the  fifth  and  sixth  classes,  munici- 
pal indebtedness  may  be  created  for  corporate  purposes  when 

1  The  funding  act  referred  to  in  this  section  and  not  given  herein, 
provides  for  the  refunding  of  county  indebtedness  outstanding  January 
ist,  1880.  The  act  includes  a  form  to  be  substantially  followed  in  the 
issue  of  the  bonds.  (Sec.  25,  Co.  Govt.  Act.) 


242  CALIFORNIA — CITY    BONDS. 

authorized  in  the  same  manner  at  a  special  election  called 
after  two  weeks'  published  notice.  (Mun.  Corp.  Act  of  1883; 
sees.  329,  528,  768,  and  866.) 

g.  Funding  Bonds  : — The  board  of  trustees  or  municipal 
council  of  any  city,  except  a  city  of  the  first  class,  having  out- 
standing indebtedness  January  ist,  1880,  evidenced  by  bonds 
or  warrants,  may,  by  a  vote  of  two-thirds  of  all  the  members, 
fund  the  same  with  city  bonds  issued  in  sums  of  not  less  than 
one  hundred  dollars,  nor  more  than  one  thousand  dollars,  run- 
ning not  more  than  twenty  years,  and  bearing  interest  at  not 
to  exceed  seven  per  cent,  payable  semi-annually.  The  new 
bonds  may  be  sold  at  public  sale,  after  three  weeks'  published 
notice,  at  not  less  than  par,  or  exchanged  for  such  outstanding 
indebtedness.  The  form  is  given  in  the  act,  providing  for  their 
payment  to  a  payee  or  order,  and  making  them  payable  at  the 
pleasure  of  the  said  board  any  time  before  maturity.  A  rec- 
ord of  the  purchasers  must  be  kept,  and  all  transfers  of  the 
bonds  noted  therein.  (Sees.  44  and  45;  Act  of  1883.) 

10.  Sewer  Bonds; — If  any  city  council  deem  it  neces- 
sary to  incur  an  indebtedness  for  the  construction  of  sewers  in 
excess  of  the  money  applicable  therefor,  they  shall  give  notice 
of  a  special  election  to  determine  whether  such  indebtedness 
shall  be  incurred.  The  notice  shall  be  published  at  least  three 
weeks,  and  shall  specify  the  amount  of  the  proposed  indebted- 
ness, with  the  route  and  general  character  of  the  proposed 
sewer,  and  the  amount  of  money  necessary  to  be  raised  annu- 
ally by  taxation  for  the  necessary  interest  and  sinking  fund. 
If  not  less  than  two-thirds  of  those  voting  are  in  favor  of  the 
question,  the  council  may  provide  for  such  indebtedness  by 
ordinance,  which  must  include  a  provision  for  its  payment  by 
taxation,  within  twenty  years. 

n.  How  Issued — Sale: — Any  bonds  issued  under  these 
provisions  shall  be  in  sums  of  not  less  than  one  hundred  nor 
more  than  one  thousand  dollars,  be  signed  by  the  mayor  and 
treasurer  of  the  city,  and  have  the  city  seal  attached.  The 
coupons  shall  be  signed  by  the  mayor  and  treasurer.  The 
bonds  shall  bear  interest  at  a  rate  to  be  fixed  by  the  city 


CALIFORNIA — SCHOOL    BONDS.  243 

council,  but  not  exceeding  five  per  cent.  They  shall  be  sold 
under  an  order  of  the  council,  at  public  sale,  on  sealed  bids, 
after  fifteen  days'  published  notice,  or  the  council  may  sell 
them,  at  not  less  than  par,  without  such  notice.  (Act  of  March 
i8th,  1885;  sees.  27  to  31.) 

12.  Water- works,  in  Cities  of  the  First  Class: — Any  city 
of  this  class  may  submit  a  proposition  to  supply  the  city  with 
public  water-works.     If  two-thirds  of  those  voting  vote  there- 
for, the  council  may  issue  bonds  payable  on  the  first  day  of 
July,    1905,   unless   previously  redeemed,  to   an  amount   not 
exceeding  one  hundred  thousand  dollars.      The  bonds  shall 
bear  interest  at  not  to  exceed  six  per  cent,  payable  semi- 
annually,  on  the  first  days  of  January  and  July.     They  shall 
be  payable  at  the  office  of  the  treasurer,  signed  by  the  presid- 
ing officer  of  the  council,  or  board  of  trustees,  and  counter- 
signed by  the  city  clerk.     The  coupons  shall  be  signed  by  the 
city  treasurer.     (Laws  of  1885,  p.  42.) 

SCHOOL  BONDS. 

13.  The  board  of  trustees  (numbering  three,  except  in 
certain  city  boards,)  of  any  school  district  may  submit  to  the 
electors  of  the  district  the  question  of  issuing  bonds  for  the 
purpose  of  raising  money  to  provide  and  furnish  schoolhouses, 
or  liquidate  any  indebtedness  incurred  for  such  purposes.     A 
notice  stating  the  time,  place  and  hours  of  the  proposed  elec- 
tion, the  amount,  denomination,  rate  of  interest,  and  time  to 
run,  not  to  exceed  ten  years,  of  the  proposed  bonds,  must  be 
signed  by  the  board,  and  posted  in  three  of  the  most  public 
places  in  the  district  for  not  less  than  twenty  days  previous  to 
the  election.     If  there  is  a  newspaper  in  the  district,  the  notice 
must  be  published  therein  not  less  than  once  a  week  for  three 
consecutive  weeks  previously. 

14.  How  Issued — Amount —  Tax: — The  issue  of  the  bonds 
requires  a  majority  of  two:thirds  of  those  voting  thereon.     The 
trustees  are  required  to  certify  the  result  to  the  board  of  super- 
visors, whose  duty  it  is  to  issue  the  bonds,  and  prescribe  the 
form  thereof.     The  interest  thereon  shall  not  exceed  eight  per 
cent  per  annum,  payable  annually.     The  bonds  shall  be  sold 


244  CALIFORNIA — OREGON. 

as  prescribed  by  the  board  of  supervisors  at  not  less  than  par. 
The  tax  for  the  payment  of  the  interest  and  principal  thereof 
must  be  levied,  and  if  the  proper  county  officers  fail  so  to  do, 
the  necessary  taxes  may  be  collected  through  the  state  officers. 
(1880-1888.) 

GENERAL. 

15.  Funding  Bonds: — When  any  county,  or  any  sub- 
division thereof,  has  an  existing  bonded  debt  which  it  is  pos- 
sible to  fund  at  a  lower  rate  of  interest,  the  supervisors  may 
refund  such  indebtedness,  or  any  part  thereof,  with  new  bonds 
of  the  same  denomination  and  form.  The  board  shall  notify 
the  holders  of  the  outstanding  bonds  by  personal  service, 
or  by  publication  for  one  month  in  the  official  county  news- 
paper, that,  unless  they  shall  within  thirty  days  present  the 
bonds  to  the  board,  and  consent  to  a  reduction  of  the  interest 
thereon  to  as  low  a  rate  as  is  offered  by  anj>-  other  person,  the 
board  will  proceed  to  cancel  said  bonds  by  payment.  (Sec. 
4048,  Act  of  March  18,  1885.) 


OREGON. 


References  are  to  Hill's  Annotated  Statutes  of  1887. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  in  effect  on  admission  of  State  in  1859. 

16.  State     Indebtedness: — The     legislative    assembly 
shall  not  loan  the  credit  of  the  state,  nor  in  any  manner  create 
any  debts  or  liabilities  exceeding,  in  the  aggregate,  fifty  thou- 
sand dollars  (except  in  case  of  war,  etc.),  and  all  excess  shall 
be  void.     (Act.  ii,  sec.  7.) 

17.  State  Credit : — The  state  shall  not  subscribe  to  or 
be  interested  in  the  stock  of  any  company,  association  or  cor- 
poration.    The  state  shall   never  Assume  the  debts  of  any 
county,  town  or  other  corporation,  unless  such  debts  have  been 
created  to  repel  invasion,  suppress  insurrection  or  defend  the 
state  in  war.     (Id.,  sec.  6  to  8.) 

18.  Municipal  Credit : — No  county,  city,  town,  or  other 


OREGON — COUNTY  BONDS — NEVADA.         245 

municipal  corporation,  by  vote  of  its  citizens  or  otherwise,  shall 
become  a  stockholder  in  any  joint  stock  company,  corporation, 
or  association,  or  raise  money  for,  or  loan  its  credit  to,  or  in  aid 
of  any  such  company,  corporation  or  association.  (Id.,  sec.  9.) 
ig.  County  Indebtedness  : — No  county  shall  create  any 
debt  or  liability  which  shall  singly  or  in  the  aggregate  exceed 
the  sum  of  five  thousand  dollars,  except  to  suppress  insurrec- 
tion or  repel  invasion.  (Id.,  sec.  10.) 

20.  Incorporating    Towns  and    Cities : — Acts  of  the 
legislative    assembly,    incorporating  towns   and    cities,   shall 
restrict  their  powers  of  taxation,  borrowing  money,  contracting 
debts,  and  loaning  their  credit.     (Id.,  sec.  5.) 

COUNTIES. 

21.  County  Management: — The  county  court  has  the 
authority  and  powers  pertaining  to  county  commissioners  in 
the  transaction  of  county  business.    Under  the  provisions  of  the 
constitution  authorizing  the  legislature  to  provide  for  the  elec- 
tion of  two  county  commissioners  to  sit  with  the  county  judge 
while  transacting  county  business,  an  act  was  passed  in  1887 
making  provisions  for  such  election.     (Const.  7,  sec.  12;  Stats, 
sees.  896,  2456.) 

22.  Issue  of  Bonds  : — This  state  has  no  general  pro- 
visions relating  to  the  issue  of  municipal  bonds.     They   are 
issued,  when  necessary,  under  the  charter  provision  of  the  vari- 
ous cities,  or  under  special  acts. 


NEVADA. 


References  are  to  the  General  Statutes  of  1885. 


CONSTITUTIONAL  LIMITATIONS  AND  PROVISIONS. 

Constitution  adopted  in  1864. 

23.  State  Credit : — The  state  shall  not  donate  or  loan 
money,  or  its  credit,  or  subscribe  to,  or  be  interested  in  the 
stock  of  any  company,  association  or  corporation,  except  cor- 
porations formed  for  educational  or  charitable  purposes.  (Art. 


246  NEVADA — MUNICIPAL   INDEBTEDNESS. 

8,  sec.  9.)  The  state  shall  never  assume  the  debts  of  any 
county,  town  or  other  corporation  whatever,  unless  such  debts 
have  been  contracted  to  repel  invasion,  suppress  insurrection 
or  provide  for  the  public  defense.  (Art.  9,  sec.  4.) 

24.  Municipal  Credit : — No  county,  city,  town  or  other 
municipal  corporation  shall  be  a  stockholder  in  any  joint  stock 
company  or  association  whatever,  or  loan  its  credit  in  aid  of 
any  such  company,  corporation  or  association,  except  railroad 
corporations,  companies  or  associations.     (Art.  8,  sec.  10.) 

25.  Special  Legislation  and  Municipal  Indebtedness: 
— The  legislature  shall  pass  no  special  act  in  any  manner  rela- 
ting to  corporate  powers,   except  for  municipal  corporations. 
(Art.  8,  sec.  i.)     The  legislature  shall  provide  for  the  organ- 
ization of  cities  and  towns  by  general  laws,  and  restrict  their 
powers  of  taxation,  assessment,  borrowing  money,  contracting 
debts,  and  loaning  their  credit,  except  for  providing  supplies 
for  water.     (Art.  8,  sec.-  8.) 

COUNTIES. 

26.  County  Board  : — The  board  of  county  commission- 
ers consists  of  three  members.     In  counties  of  four  thousand 
or  more  voters,  such  board  may  consist  of  five  members.     Reg- 
ular meetings  are  held  on  the  first  Mondays  of  January,  April, 
July  and  October.     Special  meetings  may  be  called  by  any 
member  by  entering  an  order  of   record,   and  giving  notice 
thereof  to  the  other  members.     (1942-1973.) 

27.  Issue    of    Municipal   Bonds : — This  state  has  no 
general  laws  of  any  importance  relating  to  the  issue  of  munic- 
ipal bonds.     Such  bonds  are  usually  issued  under  special  acts, 
applicable  only  to  a  particular  municipality. 


CHAPTER  XXI. 


DAKOTA. 


For  the  Federal  limitations  and  provisions  relating  to  all  the  territories, 
see  Chapter  XX I  I.  following. 


References  are  to  the  sections  of  the  Compiled  Laws  of  iS8j. 
COUNTIES.1 

1.  County  Commissioners  : — The  board  of  county  com- 
missioners of  each  organized  county  consists  of  three  elected 
commissioners,  which  number  may  be  increased  to  five  on  the 
petition  of  two-thirds  of  the  legal  voters  of  any  such  county, 
in  the  manner  provided  by  law.     Regular  meetings  of  the  board 
of  county  commissioners  are  held  on  the  first  Mondays  in  Janu- 
ary, April,  July  and  October  of  each  year.     Special  sessions 
may  be  called  by  the  county  clerk  (or  county  auditor,  in  coun- 
ties having  such  an  officer),  who  is  exofficio  clerk  of  the  board, 
upon  giving  five  days'  notice  of  the  time  and  object  by  posting 
up  notices  in  three  public  places  in  the  county,  or  by  publica- 
tion in  one  newspaper  therein.     (574  to  579.) 

2.  Extraordinary  Outlays  Must  be  Submitted : — The 
county  board  are  required  to  submit  to  the  people  of  the  county 
at  some  regular  or  special  election  any  question  involving  an 
extraordinary  outlay  of  money  by  the  county,  or  any  expendi- 
ture greater  in  amount  than  can  be  provided  for  by  an  annual 
tax,  or  whether  the  county  will  construct  any  courthouse,  jail 
or  other  public  building,  or  aid  or  construct  any  road  or  bridge. 
They  may  aid  any  enterprise  devised  for  the  benefit  of  the 
county  whenever  a  majority  of  the  people  thereof  shall  author- 
ize the  same,  as  hereinafter  provided.     (597.) 

3.  Mode  of  Submitting  Propositions : — "The  whole  ques- 
1  Also  see  \\  46-48. 

(247) 


248  DAKOTA — COUNTY    BONDS. 

tion,  including  the  sura  desired  to  be  raised,  or  the  amount  of 
tax  desired  to  be  levied,  or  the  rate  per  annum,  and  the  whole 
regulation,  including  the  time  of  its  taking  effect, "  where  prac- 
ticable, the  time  when  such  question  shall  be  voted  upon,  and 
the  form  thereof,  shall  be  published  at  least  four  weeks  in  some 
newspaper  published  in  the  county;  or  if  there  be  no  such 
paper,  the  question  shall  be  posted  in  at  least  one  of  the  most 
public  places  in  each  election  precinct,  and  a  copy  of  the  ques- 
tion submitted  shall  be  posted  at  each  voting  place  during  the 
day  of  election.  (599.) 

4.  Proposition  to  Tax  Must  be  Included — Record  of  Result 
Required : — When  the  question  submitted  involves  the  borrow- 
ing or  expenditure  of  money,  the  proposition  must  include  a  tax 
for  the  payment  thereof,  and  no  vote  adopting  the  question 
proposed  shall  be  valid  unless  it  adopts  the  amount  of  tax  to 
be  levied  to  meet  the  liability  incurred.     Such  tax  shall  in  no 
case  exceed  three  mills  on  the  dollar  of  the  county  valuation  in 
one  year.     When  the  object  is  to  borrow  money  for  the  erection 
of  public  buildings,  the  rate  shall  be  such  as  to  pay  the  debt  in 
ten  years.     When  the  object  is  to  aid  or  construct  any  road  or 
bridge,  the  annual  rate  shall  not  exceed  one  mill  on  the  dollar. 
On  being  satisfied  that  the   above   requirements   have   been 
substantially  complied  with,  and  a  majority  of  the  votes  cast 
are  in  favor  of  the  submitted  proposition,  the  commissioners 
shall  cause  the  same  to  be  entered  at  large  upon  their  records. 
Propositions  thus  acted  upon  can  not  be  rescinded  by  the  board 
of  county  commissioners.     (602.) 

5.  Funding  Bonds  : — The  county  commissioners  of  any 
organized  county  are  authorized,  when  they  shall  deem  it  to  be 
to  the  best  interest  of  the  county,  to  issue  bonds  for  the  sole 
purpose  of  funding  outstanding  indebtednesss  existing  July  i, 
1887,   represented  by  the  legally  issued  county  warrants  or 
orders  of  such  county  issued  since  July  i,  1880,  but  no  bonds 
shall  be  issued  to  provide  money  to  pay  or  fund  any  indebted- 
ness created   since  July   29,    1886,   which   in  the  aggregate, 
including  the  then  existing  indebtedness,  exceeded  four  per 
cent  of  the  assessed  valuation  of  such  county.     No  bonds  in 


DAKOTA — COUNTY  BOXDS.  249 

excess  of  twenty  thousand  dollars  shall  be  issued  by  any  one 
county  under  this  act,  unless  authorized  by  a  majority  vote  of 
the  qualified  voters  at  a  special  election  called  for  the  purpose 
by  the  commissioners  under  a  notice,  stating  the  amount  of 
bonds  to  be  issued,  when  payable  and  the  rate  of  interest 
proposed. 

6.  Form  and  Execution  : — Said  bonds  shall  be  in  denom- 
inations of  not  less  than  one  hundred  dollars,  nor  more  than 
one  thousand  dollars,  bearing  the  date  of  their  issue,  payable 
to  the  purchaser  or  bearer  anywhere  in  the  United  States  as 
may  be  agreed,  in  not  less  than  five  nor  more  than  fifteen 
years,  with  interest  at  a  rate  not  to  exceed  seven  per  cent, 
payable  semi-annually,  to  be  evidenced  by  coupons  attached. 
The  bonds  and  coupons  shall  be  signed  by  the  chairman  of  the 
board  of  county  commissioners,  and  attested  by  the  county 
clerk  or  auditor,  as  the  case  may  be.     Each  bond  shall  bear 
the  county  seal  and  shall  state  on  its  face  that  it  is  issued  in 
accordance  and  in  strict  compliance  wyith  the  act  of  the  legis- 
lative assembly  of  the  territory  of   Dakota,  entitled  "An  Act 
authorizing   and   empowering   organized   counties  of  Dakota 
territory  to  issue  and  dispose  of  bonds  to  provide  funds  to  pay 
outstanding  indebtedness,  and  to  provide  for  the  payment  of 
the  principal  and  interest  thereof,"  approved. . . .,  1887,'  and  a 
copy  of  the  said  act  shall   be  printed  on  the  back  of  each 
bond. 

7.  Sale — Registration — Tax: — The    county   treasurer   is 
required  to  register  said  bonds  before  delivery  thereof  to  the 
purchaser,  giving  the  number,  date  of  maturity,  amount,  rate 
of  interest,  and  to  whom  and  where  payable.     They  shall  be 
sold  or  exchanged  at  not  less  than  par.     A  sufficient  tax  must 
be  provided  to  pay  the  interest  and  principal  as  they  become 
due.     (696,  703.) 

8.  Liquidating  Bonds: — In  case  of   the  division  of  a 
county,  as  by  law  provided,  the  county  commissioners  of  any 
new  county  organized,  for  the  purpose  of  providing  for  the  pay- 
ment of  such   new  county's  proportion  of  the  old  county's 

1  This  act  was  not  approved,  but  became  a  law  March  7,  1887. 


250  DAKOTA — COUNTY   AND    CITY    BONDS. 

indebtedness,  may  issue  bonds  of  the  county.  Said  bonds 
shall  be  dated  on  the  first  days  of  January  and  July,  from  which 
the  outstanding  indebtedness  of  the  original  county  is  calcu- 
lated, for  a  period  corresponding  to,  payable  at  the  same  time 
and  place,  and  bear  the  same  interest  as  the  original  obligations 
on  account  of  which  they  are  issued.  Said  bonds  may  be 
issued  in  denomination  of  not  to  exceed  one  thousand  dollars 
as  may  be  required  by  the  original  county,  and  delivered  to 
the  county  clerk  thereof,  who  shall  make  a  record  of  such  new 
bonds  upon  his  bond  register.  Said  original  county  may 
exchange  these  new  bonds  for  its  old  outstanding  bonds  of  the 
same  class  and  amount.  The  commissioners  of  the  new  county 
shall  levy  a  tax  sufficient  to  pay  the  bonds  so  issued  and  the 
interest  thereon  as  it  becomes  due.  (545  to  560;  passed  in 
1887.) 

CITIES  AND  TOWNS.  ' 

9.  Loans  By  Cities: — Among  the  powers  possessed  by 
councils  of  incorporated  cities  is  that  of  borrowing  money  on 
the  credit  of  the  corporation  for  corporate  purposes  and  issuing 
bonds  therefor  in  such  amounts,  of  such  form  and  on  such  con- 
ditions as  may  be  prescribed  by  such  council;  to  an  amount  in 
the  aggregate,  including  existing  indebtedness,  not  to  exceed 
four  per  cent  of  the  valuation  of  the  taxable  property,  as  shown 
by  the  last  general  assessment. 

10.  Issue  Must  be  Authorized: — No  bonds  shall  be  issued 
by  the  council,  either  for  general  or  special  purposes,  unless  the 
same  has  been  authorized  by  a  majority  of  the  legal  voters 
voting  at  an  election  called  for  that  purpose,  notice  of  which 
election,  stating  the  purposes  for  which  said  bonds  are  to  be 
issued  and  the  amount  thereof,  shall  be  given  by  publication  in 
a  newspaper,  published  in  such  city,  twenty  days  previous  to 
such  election. 

1 1 .  Tax: — Before  or  at  the  time  of  incurring  any  indebt- 
edness, the  council  shall  provide  for  the  collection  of  a  direct 
annual  tax,  sufficient  to  pay  the  interest  as  it  becomes  due, 

1  Also  see  §§46-48. 


DAKOTA — CITY    BONDS.  25! 

and  to  pa\-  the  principal  of  the  bonds  within  twenty  years. 

(835,  div.  5.) 

12.  Funding  Bonds  : — The  city  council  of  incorporated 
cities  also  has  the  power  to  issue  bonds  in  place  of,  or  to  sup- 
ply money  to  meet  maturing  bonds,  or  for  the  consolidation 
or  funding  of  the  same.     (835,  div.  6.) 

13.  Internal  Improvement  Bonds  : — For  the  purpose 
of    meeting  the  expenses  of  any  local  improvement,  as  the 
opening,  paving,  curbing,  or  otherwise  improving  any  street, 
alley,   highway,  or  other    public    grounds,   for  which  special 
assessments  have  been,  or  may  be  levied,  the  city  council  may 
issue  bonds  of  the  city  to  an  amount  not  exceeding  one-half  of 
one  per  cent  of  the  taxable  property  thereof.     Such  issue  of 
bonds  shall  not  be  increased  until  the  valuation  of  the  city 
shall  have  increased  at  least  one  hundred  thousand  dollars  over 
and  above  the  valuation  upon  which  the  next  preceding  issue 
shall  have  been  based. 

14.  Form — Sale — Tax: — Said  bonds  shall  be  known  as 
"Internal  Improvement  Bonds"  and  shall  be  issued  in  amounts 
of  not  less  than  five  hundred  dollars  each,  bear  interest  at  a 
rate  not  exceeding  seven  per  cent,  payable  annually  or  semi- 
annually,  with  interest  coupons  attached,  and  payable  in  New 
York  city,  or  the  city  issuing  the  same,  in  not  less  than  twenty 
years.     They  shall  be  signed  by  the  mayor  and  countersigned 
by  the  auditor,  who  shall  fix  the  official  seal  of  the  city  thereto, 
and  keep  an  accurate  record  of  all  bonds  issued,  in  a  book  pro- 
vided for  that  purpose.     The  bonds  shall  be  sold  at  not  less  than 
ninety-five  per  cent  of  their  face  value.     All  moneys  arising 
from  assessments  levied  in  the  matter  of  any  such  improve- 
ments shall  constitute  a  fund  for  the  payment  of  said  bonds. 
(996  to  999  ;  passed  in  1887.) 

15.  Sewerage  Bonds  : — The  city  council  of  any  incor- 
porated city,  for  the  purpose  of  raising  funds  for  the  establish- 
ment, construction  and  maintenance  of  a  system  of  sewerage, 
is  authorized  to  issue  bonds  of  the  city  to  an  amount  not 
exceeding  the  sum  of  one  hundred  thousand  dollars,  payable  in 


252  DAKOTA — TOWN    BONDS. 

not  to  exceed  twenty  years,  in  the  city  of  New  York,  and  bear- 
ing interest  at  the  rate  of  seven  per  cent  per  annum,  payable 
semi-annually.  Said  bonds  shall  be  signed  and  executed  as 
provided  in  the  case  of  internal  improvement  bonds.  At  no 
time  shall  there  be  more  than  one  hundred  thousand  dollars  of 
such  bonds  outstanding  and  unpaid.  They  shall  not  be  sold  at 
less  than  their  par  value.  The  city  is  required  to  provide  by 
special  assessment,  and  also  to  levy  a  sufficient  special  tax  for 
the  payment  of  the  interest  on  such  bonds  as  it  accrues  and  to 
create  a  general  sinking  fund  to  pay  the  bonds  as  they  become 
due.  (1000,  1007;  passed  in  1887.) 

16.  Loans  by  Incorporated  Towns  : — No  incorporated 
town  shall  have  power  to  borrow  money  or  incur  any  debt  or 
liability,   unless  citizen-owners  of  five-eighths  of  the  taxable 
property  thereof,  as  shown  by  the  assessment  roll  of  the  pre- 
ceding year,  petition  the  board  of  trustees  to  contract  such 
debt  or  loan,  the  genuineness  of  the  signatures  to  such  petition 
being  verified  by  affidavit.     For  any  debt  thus  created  the 
trustees  shall  provide,   by  lev}*,   a  sufficient  tax  to  pay  the 
annual  interest  thereon,  with  an  addition  of  not  less  than  five 
cents  on  the  one  hundred  dollars  to  create  a  sinking  fund  for 
the  liquidation  of  the  principal.     (1048.) 

17.  Limit  of  Township  Debt: — No  town  has  power 
to  contract  debts  or  to  make  expenditures  for  any  one  year, 
without  having  been  authorized  by  a  majority  of  the  voters  of 
such  township,  and  no  town  shall  assess  for  township  purposes 
more  than  ten  mills  on  the  dollar  of  taxable  property  for  any 
one  year.     (829.) 

18.  Town  Bonds  : — When  so  directed  by  two-thirds  of 
the  legal  voters  present  and  voting  at  any  legally  called  town 
meeting  held  for  the  purpose,  the  board  of  supervisors  of  any 
organized  township  are  authorized  to  issue  the  bonds  of  their 
respective  towns,  bearing  not  to  exceed  eight  per  cent  interest, 
payable  annually.     The  amounts  thereof,  how  payable,  and  the 
time  to  run,  not  exceeding  six  years,  shall  be  determined  by 
the  same  vote.     Such  town  meeting  must  have  been  called  for 
that  purpose  by  a  notice  particularly    specifying   the   object 


DAKOTA — TOWN    BONDS.  253 

thereof,  and  posted  in  at  least  three  public  places  in  said  town, 
for  not  less  than  ten  days  previously.     (830.) 

19.  Sale — Tax: — Said  bonds  shall  not  be  negotiated  for 
less  than  their  par  value.     It  is  made  the  duty  of  the  board  of 
supervisors  to  levy  and  certify  to  the  county  clerk  or  auditor 
each  year  therefor  a  sufficient  tax  upon  the  taxable  property  of 
the  town  to  pay  the  interest  and  principal  of  such  bonds  as 
the}'  become  due.     (831-832.) 

20.  Town  Bonds  for  Roads  and  Bridges  : — Upon  pres- 
entation to  the  board  of  supervisors  of  any  organized  town  of 
a  petition,  signed  by  two-thirds  of  the  legal  voters  thereof,  as 
shown  by  the  last  registered  poll-list,  praying  that  a  certain 
amount  of  money,  not  to  exceed  five  per  cent  of  the  assessed 
valuation  of  such  town,  and  not  in  any  case  exceeding  five 
thousand  dollars,  may  be  raised  for  the  construction  of  any 
public  road  or  bridge,   embankment,   levee  or  similar  work 
within  such  township,  said  supervisors  shall  issue  and  sell 
bonds  of  the  town  for  the  amount  prayed. 

21.  Form — Sale —  Tax : — Said  bonds  shall  run  not  longer 
than  twenty  years,  bear  interest  at  a  rate  not  exceeding  ten 
per  cent,  payable  annually,  and  shall  be  signed  by  the  chairman 
of  the  board  of  supervisors  and  countersigned  by  the  town 
clerk.     The  town  clerk  shall  file  and  record  the  petition  upon 
which  the  bonds  were  issued,  and  shall  keep  a  record  showing 
the  action  of  the  board  of  supervisors,  and  also  a  record  of  said 
bonds  showing  the  amount,  date  of  issue,  to  whom  issued,  rate 
of  interest,  and  date  of  maturity.      The  bonds  shall  not  be 
sold  or  disposed  of  for  less  than  their  par  value.    Said  town  shall 
provide  for  the  payment  of  said  bonds  and  the  interest  thereon 
by  sufficient  taxation  to  meet  the  same.     (833  to  836. ) 

22.  Township   Drainage   Bonds : — Whenever  ten   or 
more  actual  residents  of  any  organized  town  present  a  written 
petition  to  the  board  of  supervisors  praying  for  the  ditching, 
draining,  grading  or  surveying  of  such  township  or  any  major 
portion  thereof,  the  said  board  shall  cause  to  be  made  an  esti- 
mate of  the  proposed  work  or  improvement,  and  if  the  cost  of 


254  DAKOTA — TOWNSHIP    BONDS. 

the  same  shall  exceed  one  thousand  dollars,  the  board  may 
submit  the  question  of  issuing  bonds  of  the  town  to  the  voters 
thereof  at  a  regular  or  special  election,  giving  at  least  twenty 
days'  notice  thereof  by  posting  in  at  least  five  public  places 
therein,  specifying  the  specific  purposes  for  which  the  same  is 
called  and  the  amount  of  bonds  to  be  issued.  If  a  majority  of 
the  legal  voters  voting  at  such  election  are  in  favor  of  the  ques- 
tion submitted,  the  bonds  may  be  issued  as  proposed. 

23.  Form — Tax — Record — -Limit: — Said  bonds  shall  be 
known  as  "Town  Improvement  Bonds,"  and  shall  be  signed 
by  the  chairman  of  the  board  of  supervisors  and  town  clerk, 
and  countersigned  by  the  township  treasurer.     They  shall  run 
for  a  time  not  exceeding  ten  years  and  draw  interest  at  a  rate 
not  exceeding  eight  per  cent,  payable  annually  with  coupons 
attached,  and  shall  be  disposed  of  at  not  less  than  par.     The 
board  of  supervisors  are  required  to  provide  for  the  levy  of 
sufficient  taxes  to  meet  the  interest  thereon  as  it  becomes  due, 
and  for  a  sinking  fund  to  pay  the  principal  at  maturity.     Both 
the  treasurer  and  clerk  shall  keep  a  record  showing  the  date  of 
issue,  to  whom  issued,  amount,  number  of  each  bond,  date  of 
maturity,  rate  of  interest,  and  amount  realized  from  the  sale 
thereof.     The  amount  of  such  bonds,   including  outstanding 
indebtedness,  shall  not  exceed  four  per  cent  of  the  assessed 
valuation  of  said  township.     (2080  to  2089.) 

SCHOOL  BONDS. 

24.  Township  School  Bonds  : — Any  organized  school 
township  is  authorized  to  issue  bonds,  the  proceeds  thereof  to 
be  used  exclusively  in  building  and  furnishing  schoolhouses 
for  such  township.     No  township  shall  issue  such  school  bonds 
to  an  amount  greater  than  fifteen  hundred  dollars  for  each 
separate  schoolhouse  required,  and  twenty-five  hundred  dollars 
for  each  two-room  graded  school,  which  the  school  board  is 
authorized  to  erect.      For  regular  graded  schoolhouses,  each 
township  may  issue  bonds  to  the  amount  of  five  thousand 
dollars,  and  where  two  or  more  school  townships  join  in  erect- 
ing a  graded  school  building  and  establishing  a  graded  school, 


DAKOTA — TOWNSHIP    SCHOOL    BONDS.  255 

each  township  joining  may  issue  bonds  to  the  amount  of  three 
thousand  dollars  for  such  purpose.1 

25.  Question  Submitted : — All  such  propositions  must  be 
submitted  specifically  to  a  vote  of  the  township,  but  the  ques- 
tion of  issuing  bonds  for  the  erection  of  two  or  more  separate 
ordinary  schoolhouses,  and  furnishing  the  same,  may  be  sub- 
mitted at  the  same  time  and  voted  upon  as  one  question.     The 
question  of  issuing  bonds  for  graded  schools  ma}-  be  submitted 
at  the  same  or  at  different  elections,  but  must  be  separate  and 
so  stated  as  to  permit  a  separate  vote  upon  every  such  proposi- 
tion.    Notice  of  any  such  election,  signed  by  the  clerk  of  the 
township,  shall  be  posted  in  not  less  than  six  of   the  most 
public  places  therein,  not  less  than  twenty  days  previously. 
The  notices  shall  state  the  date,  object  and  place  of  the  election, 
and  the  precise  amount  of  bonds  proposed  to  be  issued,  the 
number,  and  as  near  as  may  be,  the  location  of  the  schoolhouses 
proposed  to  be  erected  from  the  proceeds  of  the  bonds.     The 
election  shall  be  held  as  provided  for  other  township  elections, 
and  the  ballots  shall  have  written  or  printed  thereon  the  words, 
' '  For  schoolhouse  bonds, "  or  "  Against  schoolhouse  bonds. ' ' 
The  majority  of  the  votes  cast  shall  be  required  to  authorize 
the  issue  of  such  bonds.     A  return  of  the  result  of  such  elec- 
tion shall  be  made  by  the  judges  and  clerks,  and  transmitted 
to  the  county  clerk. 

26.  Form  and  Execution  of  Bonds : — The  bonds  so  issued 
shall  be  in  denominations  of  one  hundred  dollars  or  five  hundred 
dollars,  redeemable  after  eight  years,  and  payable  in  fifteen 
years  from  the  date  of  their  issue,  and  bear  interest  at  a  rate  not 
exceeding  eight  per  cent  per  annum,  payable  semi-annually, 
with  proper  coupons  attached.     Each  bond  and  coupon  shall 
be  signed  by  the  clerk  of  the  school  township  and  counter- 
signed by  the  director,  and  shall  distinctly  state  at  the  close  of 
the  bond  proper  that  it  is  issued  for  school  purposes  only,  and 

1  The  above  limitations  are  under  the  Act  of  1883,  but  the  amend- 
ment of  1885  to  one  section  of  this  act  provides  that  said  bonds  shall  not 
be  issued  to  an  amount  exceeding  seven  hundred  dollars  for  each  one- 
room  schoolhouse  thereafter  built. 


256  DAKOTA — TOWNSHIP   SCHOOL    BONDS. 

upon  the  margin  shall  have  printed,  "  Issued  in  accordance 
with  the  provisions  of  an  act  of  the  legislative  assembly  of 
Dakota  territory,  approved  March  9,  1883."  Said  bonds  shall 
be  made  payable  at  some  financial  agency  in  either  the  city  of 
New  York  or  the  city  of  Boston,  and  such  agency  may  be 
inserted  in  the  bonds  after  their  negotiation  and  sale.1 

27.  Registration  of  Bonds: — Before  the  sale  of  said  bonds, 
they  shall  be  presented  to  the  county  clerk,  who  shall  carefully 
examine  the  result  of  the  election,  filed  in  his  office,  together 
with  the  other  submitted  proofs  relating  to  the  issue  of  said 
bonds,  and  if  satisfied  that  the  bonds  have  been  legally  voted, 
he  shall,  in  a  book  kept  for  that  purpose,  preserve  a  registry 
of  each  bond,  showing  the  name  of  the  township  issuing,  the 
number  and  denomination  of  the  bond,  the  date  of  issue,  and 
other  facts;  and  upon  each  bond  shall  indorse  the  following 

certificate :    "I  hereby  certify  that  the  within  bond  for 

hundred  dollars,  of school  township, county, 

Dakota  territory,  is  issued  in  accordance  with  law,  and  by 
authority  of  a  majority  of  the  legal  voters  of  said  township, 

voting  at  an  election  duly  held ,  188 . . ,  for  that  purpose, 

and  is  duly  registered  in  this  office, ' '  which  certificate  shall  be 
officially  signed  by  such  county  clerk,  and  attested  by  the  seal 
of  the  county.     The  validity  or  obligation  of  any  such  school 
bond  so  registered  and  certified,  shall  not  be  questioned  in  any 
court  or  tribunal,  but  every  such  bond  shall  be  and  remain 
valid  and  binding.     The  township  treasurer  is  also  required  to 
enter  and  keep  in  his  books  the  number  and  amount  of  all  bonds 
sold,  and  the  time  and  place  for  all  payments. 

28.  Bond  Tax: — The  township  school  board  is  required 
to  levy  each  year  upon  the  taxable  property  of  the  township, 
a  sufficient  tax  to  pay  the  semi-annual  interest  as  it  becomes 
due,  and  after  seven  years,  a  sufficient  tax  to  provide  a  sinking 
fund  for  the  payment  of  the  principal  of  the  bonds  when  due. 
In  case  of  the  non-payment  of  any  bond  or  coupon  when  due, 

1  The  place  of  payment  was  added  by  the  amendment  of  1885, 
which  also  changed  the  maximum  rate  of  interest  from  seven  to  eight  per 
cent. 


DAKOTA — TOWNSHIP  SCHOOL  BONDS.         257 

and  for  a  period  of  six  months  thereafter,  the  holder  may  pre- 
sent the  same  to  the  county  clerk,  together  with  an  affidavit  of 
such  non-payment.  The  county  clerk  shall  make  a  record  of 
the  fact,  and  the  amount  due,  and  unless  a  proper  tax  is  already 
levied  by  the  board,  he  shall  levy  against  all  the  taxable  prop- 
erty of  the  township  liable,  a  tax  sufficient  to  produce  the 
amount  required  to  meet  such  payment,  to  be  collected  as 
other  taxes,  but  such  tax  shall  not  exceed  two  per  cent  in  any 
one  year.  The  proceeds  of  such  tax,  when  collected,  shall  be 
applied,  by  the  county  treasurer  to  the  payment  of  such  bonds 
or  coupons  in  default,  as  above. 

29.  Redemption  of  Bonds: — In  school  townships  wishing 
to   redeem   any   bonds  subject   to   redemption,    the  order  of 
redemption  shall  be  determined  by  the  treasurer  by  lot.  Notice 
of  such  redemption  shall  be  given  by  the  financial  agency  at 
which  the  bonds  are  made  payable,  by  one  publication  in  a 
paper  selected  by  it,  and  if  payable  by  the  treasurer  in  the 
township,  notice  may  be  given  by  one  publication  in  a  news- 
paper of  general  circulation  published  in  the  county,  and  in 
either  case,  the  interest  shall  cease  at  the  end  of  two  weeks 
from  the  date  of  said  publication. 

30.  Redemption  and  Funding  of  Old  Bonds: — Any  school 
district  may  issue  bonds,  as  provided  above,  in  exchange  at 
par  for  and  in  redemption  of  school  district  bonds  and  war- 
rants, issued  prior  to  its  organization,  for  which  it  is  responsi- 
ble.    This  exchange  may  be  made  by  the  school  board  without 
the  submission  of  the  question  to  a  vote,  if  they  are  previously 
advised,  in  writing,  by  the  county  attorney,  that  such  school 
district  bonds  are  valid  and  binding  upon  the  township,  which 
opinion  must  be  filed  with  the  county  clerk.     Such  redemption 
bonds  must  be  registered  and  certified  by  the  county  clerk, 
who  shall  state  that  they  are  issued  in  accordance  with  law  in 
redemption  of  lawful  school  district  bonds  or  warrants. 

31.  Lien  of  Township  School  Bonds: — School  bonds  issued 
under  any  of  the  above  provisions  shall  be  a  lien  on  the  taxa- 
ble property  of  the  school  township  issuing  them;  and  if  other 
provisions  of  law  fail  or  seriously  delay  the  payment  of  interest 


258  DAKOTA — DISTRICT   SCHOOL   BONDS. 

or  principal  by  the  neglect  or  refusal  of  officers  to  perform  their 
duty,  the  district  court  of  the  county  may,  upon  application  of 
the  holder  thereof,  and  notice  to  such  township,  cause  such 
taxes  to  be  levied  as  will  meet  the  obligations  due,  and  when 
collected  to  apply  them  to  the  payment  of  such  coupons  and 
bonds.  (1902  and  1916.) 

32.  District  School  Bonds  : — In  those  counties  having 
the  school  district  system,  school  bonds  may  be  issued  by  the 
school  board  for  the  purpose  of  building  or  furnishing  school- 
houses  or  purchasing  grounds  on  which  to  locate  the  same,  or 
to  pay  any  indebtedness  incurred  therefor,  whenever  author- 
ized by  a  majority  vote  of  all  the  qualified  electors  present  and 
voting  at  a  regular  school  district  meeting,  or  at  a  special 
meeting  held  for  that  purpose. 

33.  Qiiestion  Submitted: — Notice  of  the  meeting  at  which 
such  vote  is  to  be  taken,  shall  be  posted  in  at  least  three  public 
and  conspicuous  places  in  said  district  at   least  twenty  days 
previously.     The  notice  must  state  the  time  and  place  of  the 
meeting,  amount  of  bonds  required,   and  the  time  in  which 
they    shall  be  made  payable.     The   vote  shall  be  taken  by 
written  or  printed  ballots,  "For  issuing  bonds, "  or,  "Against 
issuing  bonds, ' '  and  a  majority  vote  shall  be  required  to  author- 
ize the  issue.     In  case  a  majority  shall  vote  against  such  issue, 
the  question  shall  not  be  again  submitted  for  one  year  there- 
after.    Said  meeting  shall  not  be  called  nor  such  questions 
submitted  in  the  first  place,  until  the  district  school  board 
shall  have  been  so  petitioned,  in  writing,  by  a  majority  of  the 
resident  electors  of  such  school  district. 

34.  Limit  of  Amount: — No  greater  amount  than  fifteen 
hundred  dollars  can  be  issued  by  any  district,  except  in  towns 
and  cities  of  more  than  one  thousand  inhabitants,  and  in  such 
districts  the   amount  shall   not   exceed  five  per  cent  of  the 
assessed  valuation  thereof. 

35.  Form  of    Bonds: — Such   bonds   shall   be   issued   in 
denominations  of  fifty  dollars,  or  some  multiple  of  fifty,  not 
exceeding  five  hundred  dollars,  shall  bear  interest  at  a  rate  not 


DAKOTA — DISTRICT   AND    CITY   SCHOOL    BONDS.  259 

exceeding  eight  per  cent  per  annum,  payable  annually,  and 
may  be  payable  in  not  less  than  ten  nor  more  than  twenty  years. 
Thej-  shall  state  upon  their  face  the  date  of  issue,  amount  of 
the  bond,  to  whom,  and  for  what  purpose  issued,  time  and 
place  of  payment,  and  rate  of  interest.  On  the  margin  shall 
be  printed,  "  Authorized  by  act  of  legislative  assembly,  A.  D. 
1 88 1,"  and  upon  the  back  thereof  a  certificate  signed  by  the 
district  clerk,  substantially  in  the  following  form:  "I  certify 
that  the  within  bond  is  issued  in  accordance  \vith  a  vote  of 

school  district  No ,  at  a  regular  (or  special,  as  the 

case  may  be)  meeting  on  the day  of ,  A.  D.  188. ., 

to  issue  bonds  to  the  amount  of dollars. ' '     They  shall 

be  signed  by  the  director  and  clerk  of  the  school  district,  or  by 
the  president  and  secretary  of  the  school  board  in  the  case  of  an 
independent  district,  and  shall  be  numbered  and  registered  in 
a  book  to  be  kept  by  the  secretary,  giving  the  number,  date 
and  name  of  the  person  to  whom  issued,  with  the  date  of 
maturity. 

36.  Sale — Tax: — Said  bonds  may  be  negotiated  and  sold 
by  the  school  board  for  not  less  than  ninety  per  cent  of  their 
par  value.     The  proceeds  shall  be  paid  to  the  school  district 
treasurer,  to  be  used  only  for  the  purpose  for  which  they  were 
issued.     In  addition  to  other  taxes,  there  shall  be  levied  upon 
the  taxable  property  of  the  district  issuing  the  bonds,  a  sum 
not  exceeding  five  mills   on  the  dollar  to   pay   the   interest 
thereon  as  it  becomes  due,  and  after  five  years,  a  further  tax  of 
two  mills  on  the  dollar,  for  a  sinking  fund  to  be  used  in  the 
payment  of  such  bonds  when  due.     (1892  to  1901.) 

37.  City  School  Bonds: — Any  organized  board  of  edu- 
cation, for  the  purpose  of  purchasing  school  sites  or  buildings, 
or  to  fund  any  bonded  indebtedness,  may  issue  bonds  when 
authorized  by  a  majority  vote  of  the  qualified  electors  voting 
thereon  at  an  election  held  for  the  purpose.     It  is  made  the 
duty  of  the  mayor  of  any  city  in  which  such  board  of  education 
may  be,  to  call  such  election  upon  the  request  of  the  board  of 
education. 

38.  Limit — Form: — The  amount  of  such   bonds  issued 


260  DAKOTA — REFUNDING   SCHOOL    BONDS. 

under  this  act  shall  not  exceed  three  per  cent  of  the  last 
assessed  valuation.  The  bonds  shall  be  signed  by  the  presi- 
dent, attested  by  the  clerk,  and  countersigned  by  the  treasurer 
of  the  board  of  education,  and  shall  specify  the  rate  of  interest, 
the  time  when  principal  and  interest  are  payable,  and  shall  be 
issued  in  denominations  of  not  less  than  fifty  dollars. 

39.  Registration — Sale — Tax: — The  clerk  is  required  to 
keep  a  registry  of  all  such  bonds,  giving  the  number,  date, 
amount,  and  to  whom  payable.     They  may  be  sold  at  not  less 
than  ninety-eight  cents  on  the  dollar.    A  sufficient  tax  must  be 
levied  to  meet  the  interest  as  it  accrues,  and  create  a  sinking 
fund  for  the  payment  of  the  principal.     (1830  to  1837;  Act  of 
1887.) 

40.  Refunding  School  Bonds  : — Any  bond  heretofore 
issued  by  any  city,  or  by  or  under  the  authority  of  any, board 
of  education  of  any  city,  for  school  purposes,  may  be  refunded 
in  the  discretion  of  said  board  whenever  there  is  not  sufficient 
money  available  to  pay  such  bonds.     They  shall  be  issued 
under  a  resolution  of  the  board  of  education,  specifying  the 
number  and  amount  of  each  bond. 

41.  Form   of  Bonds: — Said   bonds   shall   be   issued   in 
denominations  of  not  less  than  one  hundred  dollars  nor  more 
than  one  thousand  dollars;  shall  be  numbered  from  one  upwards; 
shall  bear  the  date  of  their  issue,  and  shall  be  made  payable  to 
the  purchaser  or  bearer  ten  years  from  date,  with  interest  at  not 
to  exceed  seven  per  cent  per  annum,  payable  annually.     Both 
principal  and  interest  shall  be  payable  at  such  place  as  may 
be  designated  by  the  board.     The  bonds  and  coupons  shall  be 
signed  by  the  mayor  and  attested  by  the  city  clerk  under  the 
seal  of  the  city.     There  shall  be  printed  on  the  back  of  each 
bond  a  copy  of  the  act  under  which  they  are  issued,  and  a  duly 
certified  copy  of  the   resolution  of  the  board  of  education 
authorizing  and  directing  the  execution  of  such  bonds  by  the 
mayor  and  city  clerk. 

42.  Registration — Tax — Sale : — The  city  clerk  shall  keep 
a  registry  of  all  bonds  so  executed,  showing  the  number,  date, 
amount,  interest,  name  of  payee,  when  and  where  payable. 


DAKOTA — SCHOOL    FUNDING    BONDS.  26 1 

The  bonds  shall  not  be  sold  at  less  than  par.  The  board  of 
education  is  required  to  levy  each  year  upon  the  taxable  prop- 
erty of  the  city  or  district  issuing  such  bonds,  a  sufficient  tax 
to  pay  the  interest  as  it  becomes  due,  and  after  five  years  a 
sufficient  sinking  fund  tax  to  meet  the  payment  of  the  bonds  at 
maturity.  (1151  to  1154;  Act  of  1887.) 

43.  School  Funding  Bonds,  for  Debts  Prior  to  Jutyjo, 
1886  : — All  bonds,  warrants  or  other  evidences  of  indebtedness 
issued  by  any  incorporated  board  of  education  or  school  district 
prior  to  July  30,  1886,  may  be  refunded  in  the  discretion  of  the 
proper  officers,  if  there  are  not  funds  available  to  pay  the  same. 
Such  issue  must  be  authorized   by  a  two-thirds  vote  of  all 
the  qualified  electors  voting  at  an  election  called  for  that  pur- 
pose, after  twenty  days'  notice,  given  by  posting  written  notices 
in  three  of  the  most  conspicuous  places  in  such  city  or  district 
and   by   publication   in   a   newspaper   in   the    county.      The 
notice  must  give  the  time  and  place  at  which  the  election  is  to 
be  held,  the  amount  of  bonds  to  be  issued,  the  rate  of  interest 
they  are  to  bear,  and  the  time  which  they  are  to  run.     If  one- 
third  of  the  votes  cast  are  against  such  question,  no  further  vote 
can  be  taken  thereon  for  one  year  thereafter.    When  so  author- 
ized, the  board  of  education  shall  provide  by  resolution  for  the 
issue  of  the  bonds.      No  school  district  in  which  less  than 
twenty-five  legal  votes  were  cast  at  such  election  shall  issue 
such  bonds. 

44.  Form  of  Bond :  —  Said   bonds  shall   be  issued    in 
denominations  of  not  less  than  one  hundred  dollars  nor  more 
than  one  thousand  dollars,  running  not  less  than  ten  nor  more 
than  twenty  years,  and  bear  interest  at  a  rate  not  exceeding 
seven  per  cent,  payable  annually  or  semi-annually,  at  such 
places  as  may  be  agreed.     A  copy  of  the  act  under  which  they 
are  issued  shall  be  printed  on  the  back  of  each  bond,  and  they 
shall  recite  that  they  are  issued  under  and  by  authority  of  such 
act,  naming  it  by  its  title  and  giving  the  date  of  its  approval. 
(March  n,  1887.)     They  shall  be  executed  by  the  president 
under  the  seal  of  the  board,  or  in  school  districts  by  the  presi- 
dent or  director,  and  attested  by  the  clerk. 


262  DAKOTA — MUNICIPAL    BONDS. 

45.  Registration — Sale — Tax  : — The   clerk  shall  keep  a 
record  of  all  bonds  so  issued,  giving  the  number,  date,  amount, 
rate  of  interest,  whether  payable  annually  or  semi-annually, 
and  the  time  and  place  of  payment.     Said  bonds  shall  be  sold 
or  exchanged  at  not  less  than  par.     There  shall  be  a  sufficient 
tax  levied  to  pay  the  interest,  and  alter  seven  years  to  provide 
a  sinking  fund  for  the  payment  of  the  principal.     (1879-1888; 
Act  of  1887.) 

GENERAL. 

46.  Municipal  Bonds — Generally: — Any  organized  city 
or  municipal  corporation  may  incur  a  bonded  indebtedness  for 
the  purpose  of  erecting  public  school  buildings  and  other  build- 
ings for  city  purposes,   bridges  or  fire  apparatus,  putting  in 
water-works,  sinking  public  wells  or  cisterns,  putting  in  sewTers, 
and  improving  streets,  to  an  amount  with  existing  indebted- 
ness not  exceeding  four  per  cent  of  the  assessed  valuation  of 
such   city   or   municipal   corporation,   as   shown   by   the   last 
assessment  therein. 

47.  How  Authorized  and  Issued: — Said  bonds  shall  not 
be  issued  by  the  common  council  or  board  of  trustees  of  any 
city  or  municipal  corporation,  unless  authorized  by  a  majority 
vote  of  the  qualified  electors  at  an  election  regularly  called 
for  that  purpose  in  accordance  with  the  charter  of  such  city  or 
municipal  corporation  relating  thereto.      The  question  may 
be  submitted  at  any  annual  election.     In  those  cities  where  no 
provisions  exist  in  the  charter  as  to  calling  such  elections,  the 
city  council  or  board  of  trustees,  at  any  regular  meeting  thereof, 
may  provide  for  the  calling  of  a  special  election  to  vote  for  any 
of  the  above  purposes.     They  shall  give  notice  of  such  election 
by  at  least  two  publications  in  a  weekly  newspaper  published  in 
such  city,  or  if  there  is  no  such  paper,  by  posting  in  five  public 
places  therein.     The  notice  shall  state  the  amount  and  denom- 
inations of  the  bonds  to  be  voted  for,  rate  of  interest,  purpose 
for  which  they  are  to  be  issued,  form  of  the  ballot  to  be  used, 
and  the  time  and  place  of  holding  such  election.     Said  bonds 
shall  be  sold  at  not  less  than  par.     It  is  provided  that  this  act 


DAKOTA — CALLING    BONDS    FOR    PAYMENT.  263 

shall  not  be  construed  to  limit  or  restrict  any  powers  conferred 
by  any  special  charter.      (1149-1150;  Act  of  1887.) 

48.  Calling  Bonds  for  Payment: — Whenever  any  terri- 
torial, county,  township,  city,  school  or  other  public  bonds 
shall  become  payable  under  any  option  or  provision  contained 
therein  or  relating  thereto,  it  shall  be  allowable  for  the  treas- 
urer of  such  municipal  corporation  to  call  said  bonds  by 
publication,  giving  a  description  of  the  same,  including  the 
date,  number,  amount,  by  whom  issued,  to  whom  and  where 
payable,  and  announcing  that  after  a  specified  date,  not  less 
than  thirty  nor  more  than  sixty  days  after  the  date  of  the  call, 
the  interest  on  such  bonds  will  cease.  Such  call  shall  be  pub- 
lished for  fifteen  consecutive  days  in  some  daily  newspaper,  or 
for  four  consecutive  weeks  in  some  weekly  newspaper  of  gen- 
eral circulation  in  the  county  in  which  said  bonds  are  payable. 
But  personal  service  of  such  a  notice,  upon  the  holder  of  the 
bonds  so  called,  is  declared  to  be  equivalent  to  such  publication. 
(1681  to  1683;  Act  of  1887.) 


CHAPTER  XXII. 


TERRITORIES. 


FEDERAL  LIMITATIONS  AND  PROVISIONS. 


References  are  to  the  sections  of  the  Revised  Statutes  of  the  United  States 
and  Supplements. 

1.  Territorial  and    Municipal   Credit: — No  territory 
of  the  United  States  or  any  political  or  municipal  corporation 
or  subdivision  of  any  such  territory  shall  hereafter  make  any 
subscription  to  the  capital  stock  of  any  incorporated  company, 
or  company  or  association  having  corporate  powers,  or  in  any 
manner  loan  its  credit  to,  or  use  it  for  the  benefit  of,  or  borrow 
any  money  for  the  use  of  any  such  corporation  or  company. 

2.  Indebtedness  of  Territories : — The   legislature  of 
any  territory  is  authorized  to  contract  debts  on  behalf  of  such 
territory,  only  to  meet  a  casual  deficit  in  the  revenue,  to  pay 
the  interest  on  the  territorial  debt,  to  suppress  insurrections  or 
to  provide  for  the  public  defense,  except  that  in  addition  to 
any  indebtedness  created  for  such  purposes,   a  loan  may  be 
authorized  for  the  erection  of  penal,  charitable  or  educational 
institutions  for  such  territory,  if  the  total  indebtedness  of  the 
territory  is  not  thereby  made  to  exceed  one  per  cent  upon  the 
assessed   value  of    the    taxable   property  thereof,    as   shown 
by  the  last  general  assessment.     Nothing  in  this  act  shall  be 
construed  to  prohibit  the  refunding  of  any  existing  indebted- 
ness of  such  territory,  or  of  any  political  or  municipal  corpora- 
tion, county  or  subdivision  therein. 

3.  Indebtedness  of  Municipalities  in  Territories : — 
No  political  or  municipal  corporations,  county  or  other  subdi- 
visions in  any  of  the  territories,  shall  ever  become  indebted 

in  any  manner  or  for  any  purpose  to  an  amount  in  the  aggre- 

(264) 


FEDERAL   LIMITATIONS — NEW   MEXICO.  265 

gate,  including  existing  indebtedness,  exceeding  four  per  cent 
of  the  value  of  the  taxable  property  thereof,  to  be  ascertained 
by  the  last  previous  general  assessment,  and  all  bonds  and 
obligations  in  excess  of  such  amount  given  by  any  such  cor- 
poration shall  be  void.  Nothing  in  this  act  shall  be  con- 
strued so  as  to  affect  the  validity  of  any  act  of  any  territorial 
legislature  heretofore  enacted,  or  of  any  obligations  existing  or 
contracted  thereunder,  nor  to  preclude  the  issue  of  bonds 
already  contracted  for  in  pursuance  of  law;  nor  to  prevent  any 
territorial  legislature  from  legalizing  the  acts  of  any  county  or 
other  municipal  corporation  as  to  any  bonds  heretofore  issued 
or  contracted  to  be  issued. 

4.  Special  Legislation  : — The  legislatures  of  the  terri- 
tories are  prohibited  from  passing  local  or  special  laws  (among 
other  things)  incorporating  cities,  towns  or  villages,  or  chang- 
ing or  amending  the  charter  of  any  town,  city  or  village;  for 
the  assessment  and  collection  of  taxes  for  territorial,  county, 
township,   or    road    purposes;    granting    to  any   corporation, 
association,  or  individual,  any  special  or  exclusive  privileges, 
immunity  or  franchise  whatever;  or  granting  private  charters 
or  special  privileges.     (1889.    All  of  the  above  provisions  were 
included  in  an  Act  of  Congress,  approved  July  30,  1886.) 

5.  Laws   to  be  Submitted  to   Congress  : — All  laws 
passed  by  the  legislative  assembly  and  governor  of  any  terri- 
tory, except  in  the  territories  of  Dakota,  Idaho,  Montana  and 
Wyoming,  shall  be  submitted  to  Congress,  and  if  disapproved 
shall  be  null  and  of  no  effect.     (1850.) 


NEW  MEXICO. 


References  are  to  sections  of  the  Compiled  Laws  of  1884., 

COUNTIES. 

6.  County  Board: — The  corporate  powers  of  a  county 
are  exercised  by  a  board  of  three  county  commissioners.  Reg- 
ular meetings  are  held  on  the  first  Mondays  of  January,  April, 
July,  and  October;  and  special  meetings  at  such  other  times 
as  the  public  interest  requires.  The  clerk  of  the  probate  court 


266  NEW    MEXICO— COUNTY    BONDS. 

is  ex  officio  clerk  of  the  board  of  count}-  commissioners.     (332, 

343,  350-) 

7.  County  Funding  Bonds  : — The  county  commission- 
ers are  authorized  to  issue  bonds  of  the  county  in  exchange  for 
the  outstanding  warrants  thereof.     Such  bonds  shall  be  issued 
in  denominations  of  one  hundred  dollars  and  multiples  thereof; 
shall  bear  interest  at  the  rate  of  eight  per  cent  per  annum,  and 
be  payable  in  not  less  than  five  nor  more  than  twenty  years,  at 
the  option  of  the  county  commissioners.     The  interest  shall 
be  evidenced  by  coupons  payable  on  the  first  day  of  July  in 
each  year,  which  shall  be  receivable  for  taxes  due  the  county. 
It  is  the  duty  of  the  county  commissioners  to  lev}7  a  sufficient 
tax  to  pay  the  interest  and  principal  of  such  bonds  as  they 
become  due.     (163  to  167;  Acts  of  1882.) 

8.  Railroad  Aid  Bonds  : — Any  county  in  this  territory 
for  the  purpose  of  aiding  in  the  construction  of  any  railroad 
passing  through  any  portion  of  such  county,  may  borrow  money 
and  issue  bonds  or  other  evidences  of  indebtedness  for  such 
amounts,  not  exceeding  for  any  such  road,  five  per  cent  of  the 
assessed  valuation  of  the  property  of  the  county,  as  the  electors 
of  the  county  may  determine.     The  amount  of  bonds  or  other 
evidences  of  indebtedness  that  may  become  due  in  any  one 
year  shall  not  exceed  two  per  cent  of  such  assessed  valuation 
at  the  time  of  the  issue.     (See  sec.  3  herein. ) 

9.  How  Aiithorized : — On   presentation  of  a  written  re- 
quest, signed  by  fifteen  tax-paying  electors,  being  property 
owners,  specifying  the  amount  to  be  raised,  and  the  manner  in 
which  the  same  is  proposed  to  be  raised,  the  rate  of  interest, 
and  other  particulars,  it  is  made  the  duty  of  the  county  com- 
missioners to  call  a  meeting  or  election  of  the  electors  to  vote 
upon  the  question  of  such  aid.     Four  notices  of  such  election 
or  meeting,  printed  in  both  Spanish  and  English,  shall  be  pub- 
lished at  least  fifteen  days  previously  in  some  conspicuous  place 
in  each  precinct,  and  in  some  periodical  within  the  county. 
The  notice  shall  include  a  copy  of  the  request  and  of  the  ques- 
tion submitted. 

10.  How  Issued  and  Sold : — The  bonds  shall  be  executed 


NEW    MEXICO — CITY    AND    TOWN    BONDS.  267 

by  the  county  commissioners  or  other  officers  authorized  to 
execute  such  bonds,  under  their  proper  seal  of  office,  and  shall 
be  attested  by  the  clerk  of  the  probate  court.  Such  bonds  shall 
not  be  sold  at  less  than  par,  nor  shall  they  be  delivered  or 
allowed  to  pass  from  the  possession  of  such  commissioners 
unless  upon  the  certificate  of  the  governor  that  the  railroad 
aided  has  been  entirely  completed  in  such  county,  or  in  such 
proportion  as  the  amount  of  bonds  delivered  shall  bear  to  the 
whole  sum  voted.  (2709,  2712.) 

CITIES  AND  TOWNS. 

11.  Municipal  Corporations  Classified: — Every  munic- 
ipal  corporation   having   a  population  of  three  thousand  or 
upwards  is  a  city,  and  every  municipal  corporation  having  a 
population  of  fifteen  hundred  and  less  than  three  thousand  is 
deemed  an  incorporated  town.     Provision  is  made  by  statute 
for  incorporating  or  disincorporating  such  cities  and  towns. 
The  incorporated  powers  of  a  city  are  exercised  by  a  mayor 
and  council,  and  of  an  incorporated  town  by  a  board  of  trustees, 
consisting   of   the   mayor,  recorder   and   four   other  trustees. 
(1670  to  1673,  1686.) 

12.  City  and  Town  Bonds  : — Any  city  or  incorporated 
town  may  contract  indebtedness,  borrow  money  or  issue  bonds 
for   the   purpose   of   erecting   public   buildings;   constructing 
sewers;    purchasing  or   constructing   water- works   for   fire  or 
domestic  purposes;  for  the  construction  or  purchase  of  canals 
or  some  system  for  supplying  water  for  irrigation  in  the  city  or 
town;    for  the  construction  or  purchase  of  gas-works,  or  the 
purchase  of  gas;  or  in  order  to  supply  temporary  deficits  in  the 
revenue  for  defraying  the  current  expenses  of  such  city  or 
town. 

13.  Question  Submitted — Limit  of  Amount: — Before  any 
such  debt  shall  be  created,  except  where  the  same  is  for  a  water 
supply,  the  question  must  be  submitted  to  and  approved  by  a 
majority   of  the  qualified  electors  who  have  paid  taxes  the 
preceding  year,  at  a  regular  election  of  officers  of  such  city  or 
town.     The  total  amount  of  indebtedness  for  all  purposes  at 
any  time  shall  not  exceed  five  per  cent  of  the  taxable  property 


268  NEW    MEXICO — CITY   AND   TOWN    BONDS. 

of  the  city  or  town  issuing  such  bonds,  but  this  limitation  does 
not  include  an  indebtedness  incurred  for  water-works  or  pro- 
viding water  supply.  (But  see  sec.  3  herein.) 

14.  How  Issued —  Tax : — No   such  loan  shall  be  made 
except  by  an  ordinance,  irrepealable  until  the  debt  is  fully  paid, 
specifying  the  purpose  for  which  the  money  is  borrowed,  and 
providing  for  the  levy  of  a  tax  to  meet  the  payment  of  the  bonds, 
but  the  taxes  so  levied  shall  not  in  the  aggregate  (water  debts 
excepted)  exceed  eight  mills  on  the  dollar.     The  indebtedness 
thus  created  shall  run  not  less  than  ten  nor  more  than  thirty 
years.     (1622,  div.  6,  Act  of  1884.) 

15.  Water- works  : — Any  city  or  incorporated  town  may 
erect  or  authorize  the  erection  of  water-works,  but  no  such 
works  shall  be  erected  until  a  majority  of  the  voters  of  the  city 
or  town  voting  on  the  question,  at  a  general  or  special  election, 
approve  the  same.     (1622,  div.  6  to  7.) 

16.  Funding  Bonds: — It  is  made  the  duty  of  any  city 
or  incorporated  town  having  a  floating  indebtedness  exceeding 
ten  thousand  dollars  to  provide  for  the  funding  of  the  same  as 
follows  :     Upon  the  petition   of   fifty   tax-paying   electors,   a 
notice  shall  be  published  for  thirty  days  in  a  newspaper  within 
such  city  or  town,  requesting  the  holders  to  submit  a  statement 
of  the  amount  of  the  warrants  which  they  will  exchange  for 
bonds  at  par.     After  such  thirty  days,  upon  petition  of  fifty 
such  electors,  the  question  of  issuing  bonds  shall  be  submitted 
to  the  tax-paying  electors  at  the  next  general  election  or  at  some 
special  election.     At  least  thirty  days'  notice  of  such  election 
shall  be  given  by  publication  in  some  newspaper.     A  majority 
vote  is  required  to  authorize  the  issue  of  the  bonds. 

17.  How  Issued : — When  so  authorized  the  bonds  may  be 
issued  in  exchange  for  any  warrants  which  were  outstanding  at 
the  time  of  the  said  first  publication.     They  may  be  issued  in 
denominations  of  one  hundred  dollars  or  some  multiple  thereof, 
and  bear  interest  at  a  rate  not  to  exceed  seven  per  cent,  paya- 
ble semi-annually  at  the  office  of  the  city  or  town  treasurer  or 
in  the  city  of  New  York,  at  the  option  of  the  holders.     The 
bonds  shall  be  payable  at  the  pleasure  of  the  municipality  after 


NE\V   MEXICO — FUNDING    BONDS — ARIZONA.  269 

five  years,  and  shall  be  due  in  fifteen  years.  They  shall  be 
signed  b}r  the  mayor  and  countersigned  by  the  city  or  town 
treasurer,  and  attested  by  the  clerk  or  recorder,  and  bear  the 
seal  of  the  city  or  town.  The  form  may  be  prescribed  by  the 
council  or  board  of  trustees. 

18.  Amount  —  Registration  —  Tax  —  Redemption  :  — The 
amount  of  bonds  so  issued  is  limited  to  the  amount  of  indebt- 
edness at  the  date  of  the  said  first  publication,  \vhich  amount 
shall  be  determined  by  the  council  or  board  of  trustees,  and 
made  a  part  of  the  public  records.  A  registry  of  the  bonds 
thus  issued  shall  be  kept  by  the  treasurer  of  the  city  or  town. 
The  bonds  shall  also  be  registered  in  the  office  of  the  territorial 
auditor.  There  shall  be  levied  a  sufficient  tax  to  meet  the 
interest,  and  after  four  years  an  additional  amount  sufficient  to 
create  an  annual  fund  equal  to  ten  per  cent  of  the  bonds  issued. 
However,  taxation  for  all  purposes  is  limited  to  one  per  cent, 
and  no  indebtedness  shall  be  incurred  which  will  require  any 
greater  annual  expenditure  than  said  one  per  cent  will  fully 
pay.  The  bonds  shall  be  redeemed  and  paid  in  the  order  of 
their  numbers  after  thirty  days'  notice  by  publication.  (1718 
to  1724,  Act  of  1884.) 


ARIZONA. 


References  are  to  the  sections  in  the  Statutes  of  1887. 

19.  Territorial  Funding  Bonds  : — For  the  purpose  of 
liquidating  outstanding  debts  of  the  territory  the  governor, 
auditor  and  secretary  are  a  board  of  commissioners,  styled 
the  "Loan  Commissioners  of  the  Territory  of  Arizona,"  and 
as  such  are  authorized  from  time  to  time  to  issue  bonds  of  the 
territory,  at  a  lower  rate  of  interest  than  such  outstanding  obli- 
gations bear,  in  denominations  of  one  thousand  dollars  as  nearly 
as  practicable,  but  in  no  case  less  than  two  hundred  and 
fifty  dollars,  bearing  interest  at  not  to  exceed  six  and  one-half 
per  cent,  payable  on  the  fifteenth  day  of  January  of  each  year. 
Such  bonds  shall  be  payable  within  twenty-five  years,  signed 
by  the  loan  commissioners  under  the  territorial  seal  and  coun- 


2JO  ARIZONA COUNTY    BONDS. 

tersigned  by  the  treasurer  with  his  seal  attached,  and  may  be 
payable  at  some  bank  in  New  York  or  San  Francisco  or  at  the 
office  of  the  territorial  treasurer.  They  shall  be  registered  by 
the  state  auditor  and  sold  at  not  less  than  their  face  value,  with 
accrued  interest.  These  bonds  are  exempt  from  taxation 
within  Arizona.  (2039-2052.) 

COUNTIES. 

20.  County    Board : — The    corporate    management   of 
counties  in  this  territory  is  vested  in  a  board  of  supervisors 
composed  of  three  members,  a  majority  of  whom  constitute    a 
quorum  for  the  transaction  of  business.     The  regular  meetings 
of  such  board  are  held  on  the  first  Mondays  of  January,  April, 
July  and   October,   of  each  year.     Special   meetings  may  be 
called  by  a  majority  of  the  board.     The  board  may  elect  a 
clerk  or  appoint  the  county  recorder  as  such  clerk.     (381-393. ) 

21.  County   Bonds    for   Public    Buildings: — For  the 
purpose  of  building  a  courthouse,  jail,  or  other  public  build- 
ings, the  board  of  supervisors  may  issue  bonds  as  follows:     In 
counties  with  an  assessed  valuation  of  at  least  three  millions, 
such  bonds  may  be  issued  to  an  amount  not  exceeding  twenty 
thousand  dollars;  in  counties  with  not  less  than  two  nor  more 
than  three  millions,  to  an  amount  not  exceeding  fifteen  thou- 
sand; and  in  counties  of  less  than  two  millions,  to  an  amount 
not  exceeding  ten  thousand  dollars. 

22.  How  Issued: — Said  bonds  shall  recite  the  act  author- 
izing the  issue,  and  shall  be  signed  by  the  chairman  of  the 
board  of  supervisors  and  attested  by  the  county  clerk  with  the 
county  seal  attached.     They  shall  be  redeemable  at  the  pleas- 
ure of  the  county,  and  bear  interest  at  not  to  exceed  eight  per 
cent,  payable  semi-annually,  and  be  issued  in  denominations  of 
not  less  than  one  hundred  dollars. 

23.  Sale — Tax: — Said  bonds  shall  be  sold  by  the  county 
treasurer  under  the  direction  of  the  board  of  supervisors,  but 
for  not  less  than  ninety-five  per  cent  of  their  face  value.  A  suf- 
ficient tax  is  required  to  be  levied  to  meet  the  interest  as  it 
becomes  due,  and  to  provide  a  sinking  fund  that  will  in  five 


ARIZONA — COUNTY    BONDS.  271 

years  amount  to  at  least  twenty  per  cent  of  such  bonds;  in  nine 
years  to  forty  per  cent  thereof,  and  that  will  be  sufficient  to 
pay  the  principal  at  maturity. 

24.  Record : — The  treasurer  shall  keep  a    record    of  all 
bonds  sold  by  him,  showing  the  number,  date  of  sale,  amount, 
when  due,  name   and  postoffice  address  of  purchaser,  and  in 
case  of  a  transfer  of  such  bonds  the  holders  shall  notify  the 
treasurer  of  the  person's  name  to  whom  transferred  with  his 
postoffice  address.     (437  to  445;  adopted  in  1887.) 

25.  County  Funding  Bonds: — The  board  of  supervisors 
may  issue  bonds  of  the  county  to  redeem  or  refund  any  out- 
standing indebtedness  at  a  lower  rate  of  interest.     Such  bonds 
shall  be  issued  in  denominations  of  one  thousand  dollars  as  near 
as  practicable,  but  of  not  less  than  five  hundred  dollars,  and 
bear  interest  at  a  rate  not  to  exceed  eight  per  cent,  payable  on 
the  fifteenth  of  January.     The  bonds  may  be  made  payable  at 
any  designated  bank  in  New  York  or  San  Francisco,  or  at  the 
office  of  the  county  treasurer,  at  the  option  of  the  purchaser. 
The  place  of  payment  to  be  stated  therein.     Ten  per  cent  of  the 
bonds  so  issued  shall  be  made  payable  in  ten  years;  and  ten  per 
cent  thereof  shall  be  made  payable  annually  thereafter,  the 
last  being  payable  in  twenty  years,  but  the  board  may  make 
such  bonds  redeemable  at  any  earlier  date,  after  five  years  from 
the  time  of  issue. 

26.  Execution — Sale: — They    shall    be    signed    by   the 
chairman  of  the  board  under  the  county  seal,   and  counter- 
signed by  the  county  treasurer  with  his  seal  attached.     Each 
bond  shall  state  the  time  and  place  of  payment,  be  payable  to 
bearer,  and  recite  that  it  is  issued  in  conformity  with  the  act 
authorizing  the  same,  a  copy  of  which  shall  be  printed  on  the 
back  of  such  bond.     They  may  be  sold  by  the  county  treas- 
urer w  exchanged  for  old  indebtedness  at  not  less  than  par. 
The  treasurer  must  keep  a  bond  register  showing  all  bonds 
disposed  of  by  him  with  the  number,  rate  of  interest,  amount, 
when,  where  and  to  whom  sold,  and  if  exchanged,  for  what. 
The  tax  required  to  pay  the  interest  and  principal  of  such 
bonds  must  be  levied  by  the  proper  authorities.     The  bonds 


272  MONTANA — COUNTY  BONDS. 

are  exempt  from  taxation  within  the  territory.     (2053  to  2067; 
adopted  March  2,  1887.) 


MONTANA. 


References  are  to  tht  sections  in  the  Compiled  Statutes  of  1887. 

COUNTIES. 

27.  County  Board  : — The  powers  of  a  county  as  a  body 
corporate  are  exercised  by  a  board  of  county  commissioners, 
consisting  of  three  qualified  electors,  elected  for  a  term  of  four 
years.     The  county  clerk  is  the  clerk  of  the  board  of  county 
commissioners.     (746,  752,  830;  5th  div.) 

28.  Bonds  for  Public  Buildings  : — The  county  com- 
missioners are  authorized  to  borrow  money  upon  the  credit  of 
the  county  sufficient  for  the  erection  of  county  buildings,  or  to 
meet  the  current  expenses  of  the  county  in  case  of  a  deficit  in 
county  revenues,  but  must  first  submit  the  question  of  such 
loan  to  a  vote  of  the  electors  of  the  county.     After  having 
determined  the  sum  necessary  to  be  raised,  the  board  shall 
cause  notice  of  such  determination  and  of  the  time  when  the 
question  shall  be  submitted,  to  be  given  by  handbills  posted  in 
five  of  the  most  public  places  in  each  township  for  at  least 
thirty  days  previous  to  such  vote. 

29.  County    Bonds  to  Fund  County  Orders : — The 
county   commissioners   of  the  counties   in   this  territory   are 
authorized  at  any  time  when  they  shall  deem  it  expedient  to 
call    in   all   outstanding    county    orders,    and   issue  therefor 
bonds  with  interest-bearing  coupons,  payable  semi-annually. 

30.  How  Issued: — Said  bonds  shall  be  issued  in  sums  of 
not  less  than  fifty  dollars,  and  shall  be  signed  by  the  chairman 
of  the  board,  and  attested  by  the  county  clerk,  and  shall  spec- 
ify the  purpose  for  which  they  were  issued.     They  shall  be 
redeemable  at  the  pleasure  of  the  county  any  time  after  three 
years,  and  payable  within  seven  years  from  the  date  of  their 
issue.     (786  to  790,  Id.) 

31.  County   Funding  Bonds: — The  county    commis- 


MONTANA — COUNTY    FUNDING    BONDS.  273 

sioners  of  any  county  may  issue  on  the  credit  of  the  county, 
bonds  to  an  amount  sufficient  to  enable  them  to  redeem  all 
legal  outstanding  bonds,  warrants  or  orders,  not  exceeding  in 
the  aggregate,  including  outstanding  bonded  indebtedness,  four 
per  cent  of  the  value  of  the  taxable  property  of  the  county. 

32.  How  Issued:— Said  bonds  shall  be  redeemable  and  pay- 
able at  such  times,  not  longer  than  twenty  years  from  date,  as 
the  county  commissioners  shall  determine,  and  may  bear  inter- 
est at  a  rate  not  to  exceed  seven  per  cent  per  annum,  to  be 
evidenced  by  coupons,  payable  semi-annually,  on  the  first  days 
of  January  and  July  of  each  year.     The  commissioners  may 
fix  the  denominations  and  prescribe  the  form  of  such  bonds, 
and  each  bond  shall  be  signed  by  the  chairman  of  the  board 
and  county  treasurer,  sealed  and  countersigned  by  the  county 
clerk,  and  the  coupons  shall  be  signed  by  such  chairman  and 
county  clerk.     Each  bond  shall  be  registered  by  the  county 
treasurer  in  a  book,  showing  the  number  and  amount,   and 
when  and  to  whom  issued. 

33.  Sale: — The  county  commissioners  are  required   to 
give  notice,  stating  the  amount  of  bonds  for  sale,  by  advertis- 
ing in  some  newspaper  in  the  county,  or  if  there  is  none,  in  the 
adjoining  county,  and  also  in  one  or  more  newspapers  published 
in  the  city  of  New  York  for  a  period  of  not  less  than  thirty 
days  prior  to  the  time  said  bonds  will  be  sold,  asking  for 
sealed  proposals.     The  bonds  shall  be  sold  to  the  highest  bid- 
der for  cash  but  for  not  less  than  par.     The  county  board  at 
any  regular  meeting  may  exchange  such  bonds  for  any  out- 
standing bonds  then   due,  or  for  any  legal  county  warrants 
or  orders  issued  prior  to  the  day  fixed  by  the  board,  and 
entered  of  record  in  their   journal.      Such   exchange  to  be 
made  at  par  with  accrued  interest. 

34.  Tax — Payment: — The    county    board    are  required 
annually  to  levy  upon  the  taxable  property  of  the  county  a 
sum  sufficient  to  pay  the  interest  on  such  bonds  as  it  becomes 
due,  and  also  to  provide  for  the  redemption  of  the  bonds  at 
maturity.     To  redeem  any  bonds  subject  to  redemption,  the 
board  shall  cause  a  notice  to  be  published  in  the  newspapers, 


274  MONTANA— CITY   AND   TOWN    BONDS. 

as  provided  in  advertising  the  sale  of  such  bonds,  that  they 
will  within  thirty  days  from  the  date  of  such  notice  redeem  or 
pay  such  indebtedness,  and  shall  also  mail  such  notice  to  the 
owner  or  holder  of  such  indebtedness,  if  his  address  is  known, 
and  if  such  bonds  are  not  presented  within  such  thirty  days, 
interest  thereon  shall  cease.  (808  to  816,  5th  div.,  as  amended 
in  1887.) 

CITIES  AND  TOWNS. 

35.  Classification  : — Incorporated  cities  having  a  popu- 
lation of  five  thousand  or  upwards,  are  cities  of  the  first  class; 
those  having  a  population  of  one  thousand  five  hundred  and 
less  than  five  thousand,  are  cities  of  the  second  class;    and 
those  having  a  population  of  over  three  hundred  and  less  than 
one  thousand  five  hundred,  are  towns.     (384;  5th  div.) 

36.  City  and  Town  Bonds  : — The  council  of  any  incor- 
porated city  or  town  may  borrow  money  upon  the  credit  thereof 
and  issue  bonds  for  the  purpose  of  erecting  public  buildings, 
constructing  sewers  or  water-works,  purchasing  fire  apparatus, 
or  the  constructing  or  purchasing  of  canals  or  ditches  for  sup- 
plying water  to  such  city  or  town. 

37.  Limit  of  Indebtedness  : — The  total  amount  of  indebt- 
edness thus  contracted  shall  not  at  any  time  exceed  four  per 
cent  of  the  taxable  property  of  cities  of  the  first  class,  or  two 
per  cent  for  cities  of  the  second  class  and  towns,  as  shown  by 
the  last  assessment  thereof.     (325,  Id.) 

38.  City  Funding  Bonds  : — It  is  the  duty  of  the  council 
of  any  city  or  town,  having  a  floating  indebtedness  exceeding 
ten  thousand  dollars,  upon  the  petition  of  one  hundred  tax- 
paying  electors,  to  publish  for  thirty  days  a  notice  requesting 
the  holders  of  the  warrants  of  such  city  or  town  to  submit  in 
writing,  within  thirty  days  from  the  date  of  the  first  publica- 
tion of  such  notice,  a  statement  of  the  amount  of  such  war- 
rants with  accrued  interest,  which  they  will  exchange  at  par 
for  the  bonds  of  such  city   or  town.      At  the  first  general 
election,  or  some  special  election,  after  the  expiration  of  such 
thirty  days,  the  council  shall  submit  to  a  vote  of  the  qualified 


MONTANA — CITY    AND   SCHOOL   BONDS.  275 

tax-paying  electors,  the  question  of  issuing  such  bonds.  Notice 
of  such  election  shall  be  given  by  publication,  for  at  least  thirty 
days  immediately  preceding  the  same,  in  some  nev/spaper  in 
such  city  or  town.  Only  those  electors  who  are  shown  to  have 
paid  taxes  upon  property  assessed  to  them  in  the  preceding 
year  shall  vote  upon  such  question. 

39.  How  Issued : — If  authorized  by  a  majority  vote  at 
such  election,  the  council  or  board  of  aldermen  may  issue  bonds 
in  denominations  of  not  less  than  one  hundred  dollars  or  some 
multiple  of  that  sum,  bearing  interest  at  a  rate  not  excee'ding 
seven  per  cent  per  annum,  payable  semi-annually  at  the  office 
of  the  city  or  town  treasurer.     Such  bonds  shall  be  payable 
not  later  than  ten  years  and  at  the  pleasure  of  the  city  or  town 
after  two  years  from  date.     They  shall  be  signed  by  the  mayor 
and  countersigned  by  the  city  clerk  or  recorder,  bear  the  seal 
of  the  city  or  town,  and  shall  be  numbered  and  registered  by 
the  clerk  and  treasurer. 

40.  Amount — Redemption: — The  whole  amount  of  bonds 
so  issued  shall  not  exceed  the  indebtedness  of  such  city  or  town 
at  the  date  of  the  first  publication  of  the  above  notice.     A  tax 
is  required  to   be  levied  to  provide  for  the  payment  of  such 
bonds.     When  it  is  desired  to  redeem  any  such  bonds,  the 
treasurer  shall  cause  to  be  published  for  thirty  days  in  some 
newspaper  in  such  city  or  town,  a  notice  that  certain  described 
bonds  will  be  paid  on  presentation,  and  after  thirty  days  such 
bonds  shall  cease  to  bear  interest.     (410,  414,  Id.) 

SCHOOL  BONDS. 

41.  School  District  Bonds : — The  board  of  trustees  of 
school  districts,  for  the  purpose  of  building  or  providing  one  or 
more  schoolhouses  therein,  and  purchasing  land  necessary  for 
the  same,  whenever  a  majority  of  such  trustees  so  decide,  shall 
submit  to  the  electors  of  the  district  the  question  of  issuing 
coupon  bonds.     Such  election  shall  be  called  by  posting  notices 
in  three  of  the  most  public  places  in  the  district,  for  at  least 
twenty  days,  stating  the  time  and  place  of  such  election,  the 
amount  proposed,  and  the  purposes  for  which  such  bonds  are 


276  MONTANA — SCHOOL   BONDS. 

to  be  issued.      A  majority  of  the  votes  cast  are  required  to 
authorize  the  issue  of  the  bonds. 

42.  How  Issued: — The  board  of  trustees  shall  issue  the 
bonds  in  such  form  as  they  may  direct,  to  be  signed  by  the 
chairman  of  the  board  and  countersigned  by  the  clerk  of  the 
district;    coupons   to   be   signed   in   the  same   manner.     The 
bonds   shall   bear   interest  at  not  to   exceed   seven   per  cent, 
and  be  payable  and  redeemable  at  a  certain  specified  time. 
Each  bond  issued  shall  be  registered  by  the  county  treasurer, 
showing  the  number  and  amount,  and  the  person  to  whom  the 
same  is  issued. 

43.  Limit  of  Amount: — The  amount  of  such  bonds  shall 
not  exceed  two  per  cent  of  the  taxable  property  of  the  district, 
nor  shall  the  board  of  trustees  submit  such  question  of  issuing 
bonds   to   the  electors  more  than  once,  nor  shall  the  entire 
levy  for  such  purpose  exceed  two  per  cent  of  the  taxable  prop- 
erty in  the  district,  and  when  the  bonds  of  such  district  have 
been  issued  to  the  above  amount,  the  question  shall  not  be 
again  submitted,   nor  shall   any  additional  bonds  be   issued 
until  the  entire  outstanding  bonds  are  paid.     For  the  above 
purposes  each  school  district  is  a  body  corporate  under  the 
name  of  the  school  trustees  of  such  district. 

44.  Sale —  Tax: — Said  bonds  shall  be  sold  by  the  trustees 
at  not  less  than  par  after  advertisement  in  some  newspaper 
published  in  the  territory  for  not  less  than  four  weeks,  describ- 
ing the  bonds  to  be  sold  and  stating  the  time  and  place  of  such 
sale.     The  trustees  are  required  to  provide  by  an  annual  levy 
a  tax  to  pay  the  interest  on  such  bonds,  and  to  provide  a  sinking 
fund  to  redeem  the  principal  at  maturity.     The  interest  is  pay- 
able by  the  county  treasurer  at  his  office. 

45.  Redemption   of  Bonds: — Any  such  bonds  subject   to 
redemption  may  be  called  by  the  county  treasurer  by  posting 
in  his  office  a  notice  that  he  will  within  thirty  days  from  date 
redeem  the  bonds  then  payable,  giving  the  numbers  thereof, 
and  if  such  bonds  are   not  presented,   interest  thereon   shall 
cease  after  the  expiration  of  such  thirty  days.     (1950  to  1958; 
Ibid.,  Act  of  1883.) 


WYOMING COUNTY    BONDS.  277 


WYOMING. 


References  are  to  sections  of  the  Statutes  of  1887,  except  as  otherwise 

indicated. 
COUNTIES.1 

46.  County  Board  : — The  corporate  powers  of  a  county 
are  exercised  by  a  board  of  three  county  commissioners.  Meet- 
ings are  held  on  the  first  Mondays  of  January ,  May,  July  and 
October,   and   at  such   other   times  as,  in  the  opinion  of  the 
board,  the  public  interests  require.     The  county  clerk  is  clerk 
of  the  board  of  commissioners.     (1791  to  1800,  1842.) 

47.  County  Funding  Bonds : — The  board  of  commis- 
sioners may  issue  negotiable  county  coupon   bonds   for  the 
purpose  of  paying,  redeeming,  funding  or  refunding  any  county 
indebtedness  when  it  can  be  done  at  a  lower  rate  of  interest  and 
to  the  profit  and  benefit  of  the  county.     The  bonds  shall  be 
issued  as  near  as  practicable  in  denominations  of  one  thousand 
dollars  each,  but  bonds  of  fifty  and  of  one  hundred  dollars  may 
be  issued  when  necessary.     They  shall  bear  interest  at  not 
to  exceed  eight  per  cent,  payable  on  the  first  days  of  January 
and  July,  at  the  office  of  the  county  treasurer,  or  at  some  bank 
in  New  York  city,  designated  by  the  commissioners,  at  the 
option  of  the  holder. 

48.  Limit — How  Issued — Redemption: — The  aggregate  of 
bonds  so  issued  at  any  one  time,  together  with  existing  bonded 
indebtedness,  shall  not  exceed  three  per  cent  of  the  assessed 
valuation  of  the  county.     The  bonds  shall  be  signed  by  the 
chairman  of  the  board,  attested  by  the  clerk,  under  the  seal  of 
the  board,  and  countersigned  by  the  county  treasurer.     The 
coupons  shall    be    signed  by  the  county  treasurer.      Each 
bond  shall  state  to  whom  it  is  issued,  date  of  issue,  amount, 
and  that  it  is  issued  in  conformity  with  the  provisions  of  this 
act,  a  copy  of  which  shall  be  printed  on  the  back  of  each  bond. 
Ten  per  cent  of  the  bonds  shall  be  redeemable  in  ten  years, 

1  County  bonds  have  usually  been  issued  under  special  acts. 


278  WYOMING — COUNTY    BONDS. 

and  ten  per  cent  annually  thereafter,  but  they  may  be  redeem- 
able in  the  order  of  their  numbers,  at  the  option  of  the  county, 
any  time  after  five  years,  provided  they  so  state  on  their  face. 

49.  Sale — Redemption — Tax: — The  board  are  required  to 
give  notice  by  publication,  or  if  there  is  no  newspaper  pub- 
lished in  the  county,  by  posting  such  notice  at  the  courthouse 
door  and  at  two  other  places  in  the  county,  of  their  intention 
to  issue  such  bonds,  and  invite  bidders  therefor.     The  notice 
must  also  be  published  in  newspapers  of  general  circulation  in 
Denver,  Chicago  and  New  York.     The  bonds  shall  be  negoti- 
ated on  the  best  terms,  at  the  lowest  rate  of  interest  obtainable. 
The  county  clerk  shall  keep  a  full  register  of  all  such  bonds 
issued.    The  county  board  are  required  to  cause  to  be  levied  the 
necessary  tax  to  provide  for  the  payment  of  the  principal  and 
interest  thereof  at  maturity.     The  faith  and  credit  of  the  county 
and  all  taxable  property  within  its  limits  are  specially  pledged 
for  such  payment.     The  neglect  or  failure  of  the  proper  officers 
to  levy  the  required  tax  is  a  misdemeanor,  and  the  officers  guilty 
may  be  fined  a  sum  equal  to  the  sum  that  should  have  been 
levied.     (Laws  of  1888,  chap.  29.) 

50.  Railroad  Aid  Bonds  : — The  board  of  county  com- 
missioners may  issue  county  bonds  in  any  sum  not  greater 
than  five  per  cent  of  the  taxable  property  of  the  county,  to  aid 
in  the  construction  of  any  railroad,  whose  proposed  line  shall 
be   generally  a   north   and   south   line,  but  in  no  case  to  an 
amount  exceeding  five  thousand  dollars  per  mile.     The  issue 
must  first  be  ordered  by  a  vote  of  the  qualified  electors  of  the 
county.     An  election  for  such  purpose  is  called  upon  a  peti- 
tion signed  by  the  railway  company   asking    the    aid,    and 
by  fifty  qualified  voters.     The  commissioners  shall  give  twenty 
days'  notice,  by  publication  for  two  weeks,  of  such  proposed 
election. 

51.  How  Issued: — The  bonds  shall  be  issued  in  denomina- 
tions of  not  less  than  five  hundred  nor  more  than  one  thousand 
dollars,  and  payable  at  any  place  desired  by  the  company,  in 
not   less   than   fifteen   nor   more   than  thirty  years,  and  bear 
interest  at  not  to  exceed  six  per  cent,  payable  annually.     The 


WYOMING — CITY,    TOWN   AND   SCHOOL    BONDS.  279 

bonds  and  coupons  shall  be  signed  by  the  chairman  of  the 
county  commissioners,  and  attested  by  the  county  clerk  under 
the  seal  of  the  county.  The  interest  coupons  may  be  signed 
with  the  engraved  signatures  of  the  chairman  and  clerk.  The 
county  clerk  shall  certify  on  each  bond  the  date  of  its  delivery, 
from  which  time  it  shall  draw  interest.  The  bonds  shall  be 
registered  by  the  county  treasurer  and  shall  be  redeemable  in 
the  order  of  their  numbers,  after  fifteen  years,  on  thirty  days' 
public  notice.  Johnson,  Crook,  Carbon,  Fremont,  Sweetwater 
and  Albany  counties  are  excepted  from  the  provisions  of  the 
above  act.  (Sees.  555-564,  Act  of  1886.) 

CITIES  AND  TOWNS. 

52.  City  and  Town  Bonds  : — Cheyenne,  Laramie,  and 
the  other  larger  cities  of  this  territory  are  incorporated  under 
special  charters,  in  many  of  which  there  are  provisions  author- 
izing the  issue  of  bonds  for  water- works,  funding  and  other 
purposes  (142-444).     Towns  incorporated  under  the  provisions 
of  the  general  law  may  borrow  money  on  the  credit  of  the 
corporation  for  providing  a  water  supply  and  for  other  corporate 
purposes,  and  issue  coupon  bonds  therefor,  to  an  amount  not 
exceeding  the  four  per  cent  limitation,  in  such  amounts  and 
form,  and  on  such  conditions  as  may  be  prescribed  by  ordi- 
nance.    The  necessary  tax  to  pay  the  interest  as  it  falls  due, 
and  the  principal  within  twenty  years,  must  be  levied.     Such 
towns  may  also  issue  bonds  in  place  of,  or  to  supply  means  to 
meet  maturing  bonds,  or  for  the  consolidation,  or  funding  of 
the  same.     (468,  as  amended  by  chap.  43,  Laws  of  1888.) 

SCHOOL  BONDS. 

53.  School    Districts: — School    districts  are  corporate 
bodies  managed  by  a  board  of  directors  consisting  of  three 
elected  trustees,  who  choose  from  their  number  a  director, 
treasurer  and  clerk.     In  districts  containing  over  two  thousand 
population  the  number  of  trustees  has  been  increased  to  six. 
The  regular  annual  meeting  of  the  board  is  on  the  first  Monday 
in  May. 

V 


280  WYOMING — SCHOOL    BONDS — UTAH. 

54.  School    Bonds1 : — The    board  of   school    trustees, 
whenever  a  majority  so  decide,  may  submit  to  the  electors  of 
the  district  the  question  of  issuing  bonds,  at  a  rate  of  interest 
not  exceeding  eight  per  cent,  to  an  amount  not  exceeding  three 
per  cent  of  the  taxable  property  of  the  district,   and  payable 
within  fifteen  years,  for  the  purposes  of  building  and  furnish- 
ing schoolhouses.     If  a  majority  of  the  votes  cast  are  in  favor 
of  the  question,  the  bonds  may  be  issued. 

55.  How  Issued — Sale — Tax: — They  shall  be  signed  by 
"the  president  of  the  board  of  trustees"  (director?),  counter- 
signed by  the  county  clerk  under  the  district  seal,  and  counter- 
signed by  the  county  treasurer.     The  bonds  must  be  registered 
by  the  county  treasurer.     The  interest  is  payable  at  his  office 
January  first  to  tenth  of  each  year.     Said  bonds  shall  be  sold  at 
not  less  than  par,  after  four  weeks'  published  notice  in  a  news- 
paper published  in  the  county,  and  in  another  published  in  the 
territorial  capital.      All  bids  may  be  rejected  and  the  bonds 
sold  at  private  sale,  if  for  the  best  interests  of  the  district. 
The  law  provides  for  the  levy  of  a  special  tax  for  the  payment 
of  such  bonds  and  interest.     (Laws  of  1888,  chap.  72.) 


UTAH. 

References  are  to  the  sections  of  the  Compiled  Statutes  of  1888. 

COUNTIES. 

56.  County  Court : — The  corporate  powers  of  counties 
in  this  territory  are  exercised  by  or  through  the  county  court, 
which  is  composed  of  the  probate  judge,  who  is  chairman,  and 
three  selectmen.     The  clerk  of  the  probate  court  is  the  clerk  of 
the  county  court.       Regular  meetings  are  held  on  the  first 
Mondays  in  March,  June,  September  and  December,   and  at 
other  times  when  deemed  necessary.     (170-181.) 

57.  Limitation  on  County  Indebtedness  : — No  county 
shall  in  any  manner  give  or  loan  its  credit  to,  or  in  aid  of,  any 

1  There  are  also  a  number  of  special  acts  authorizing  the  issue  of 
school  bonds  applicable  only  to  certain  designated  districts.  (3983  to 
4066.) 


UTAH — CITY  BONDS — IDAHO.  28 1 

person  or  corporation,  or  incur  any  indebtedness  or  liability  in 
any  manner  or  for  any  purpose,  to  an  amount  exceeding  in 
any  one  year  the  total  amount  of  its  income  and  revenue  for 
the  two  preceding  fiscal  years.  Any  indebtedness  or  liability 
incurred  contrary  to  this  provision  shall  be  void.  (173  and 

I95-) 

CITIES. 

58.  Borrowing    Money  and   Issuing   Bonds : — The 
council  of  any  incorporated  city  may  borrow  money  for  corpo- 
rate purposes,  and  issue  bonds  therefor,  in  such  amounts  and 
form,  and  on  such  conditions  as  it  shall  prescribe.     The  amount 
of  such  issue  shall  not  exceed  in  the  aggregate  four  per  cent 
of  the  last  assessed  valuation  of  such  city.     The  council  shall 
provide  for  the  payment  of  the  interest  as  it  becomes  due,  and 
the   principal  thereof  within   twenty  years.     The  council  of 
any  such  city  is  also  authorized  to  issue  bonds  in  place  of,  or 
to  supply  means  to  meet  maturing  bonds,  or  for  the  consoli- 
dation or  funding  of  the  same.     Among  the  express  powers  of 
such  councils  is  the  maintaining  of  water-works,  gas-works, 
electric-light  works,  street  railways,  bath-houses,  etc.     (1755.) 

59.  Salt   Lake    City: — The  council   of  this   city   may 
borrow  money  to  an  amount,  on  which  the  interest  on  the 
aggregate  shall  not  exceed  one-fourth  of  the  city  revenues  aris- 
ing from  taxes  assessed  within  the  corporation  during  the  pre- 
ceding year.     (363. ) 


IDAHO. 

References  are  to  Sections  in  the  Revised  Statutes  of  1887. 

COUNTIES. 

60.  County  Government: — Each  county  in  this  territory 
is  governed  by  a  board  of  three  commissioners,  who  hold  regu- 
lar meetings  on  the  second  Mondays  in  January,  April,  July 
and  October.  Special  meetings  may  be  called  when  required 
by  a  majority  of  the  board,  by  an  order  entered  of  record  spec- 


282  IDAHO — COUNTY    FUNDING    BONDS. 

ifying  the  business  to  be  transacted  at  such,  meeting.  The 
clerk  must  give  five  days'  public  notice  thereof  by  posting  three 
notices  in  conspicuous  places,  one  of  which  shall  be  at  the  court- 
house door.  The  county  auditor  is  ex  officio  clerk  of  the  board. 

(1745  to  1748.) 

61.  County  Funding  Bonds: — The  board  of  county  com- 
missioners may  issue  negotiable  coupon  bonds  of  the  county 
for  the  purpose  of  paying  or  funding  any  county  indebtedness, 
when  the  same  can  be  done  at  a  lower  rate  of  interest  and  to 
the  profit  and  benefit  of  the  county.     The  bonds  issued  shall 
show  on  their  face  whether  they  are  issued  for  debts  contracted 
prior  or  subsequent  to  July  3oth,  1886,  and  shall  be  as  nearly 
as  practicable  in  denomination  of  one  thousand  dollars  each, 
but  bonds  of  five  hundred  and  one  hundred  dollars  may  be 
issued  when  necessary.     All  bonds  so  issued  shall  bear  interest 
at  not  to  exceed  eight  per  cent  per  annum,  payable  semi-annu- 
ally  on  January  ist  and  July  ist,  to  be  evidenced  by  coupons, 
and  shall  be  payable  at  the  county  treasurer's  office  or  in  New 
York,  as  may  be  designated  by  the  commissioners.     Ten  per 
cent  of  the  bonds  so  issued  shall  be  paid  in  ten  years,  and  ten 
per  cent  annually  thereafter;  but  such  bonds  may  at  the  option 
of  the  county,  if  so  stated  therein,  be  redeemed  at  any  time 
after  five  years,  in  the  order  of  their  issue. 

62.  How  executed — Sale — Registry: — The  bonds  shall  be 
signed  by  the  chairman  of  the  board,  attested  by  the  clerk,  under 
the  seal  of  the  board,  and  countersigned  by  the  county  treasurer. 
Each  bond  must  show  the  amount,  and  to  whom  issued,  and  re- 
cite that  it  is  issued  in  conformity  with  the  provisions  of  this 
chapter,  a  copy  of  which  must  be  printed  on  the  back  of  each 
bond.     The  bonds  shall  be  sold,  after  a  duly  published  notice, 
at  not  less  than  par;  and  before  delivery,  shall  be  registered  by 
the  county  auditor.     A  record  of  all  bonds  sold  shall  be  kept 
by  the  county  treasurer.     The  necessary  tax  for  the  payment 
of  both  principal  and  interest  is  required  to  be  levied  by  the 
said  board.     (3602-3607.) 


IDAHO — TOWN,    VILLAGE   AND   SCHOOL   BONDS.  283 

TOWNS  AND  VILLAGES. 

63.  Town  and  Village  Government — Loans: — The  cor- 
porate powers  of  towns  and  villages  are  vested  in  a  board  of  five 
trustees.     This  board  may  borrow  money  on  the  credit  of  the 
town  or  village,  but  no  sum  exceeding  one  thousand  dollars 
shall  be  borrowed  until  the  board  is  instructed  so  to  do  by  a 
majority  of  the  votes  cast  at  an  election  held  therein  for  that 
purpose.     (2225-2234.) 

64.  Funding   Bonds: — Any   town   or  village  board  of 
trustees,  for  the   purpose  of  funding  indebtedness,  may  issue 
bonds  payable  in  not  less  than  five  nor  more  than  twenty  years, 
and  bearing  not  to  exceed  ten  per  cent  interest,  with  coupons 
therefor  attached,  payable  annually  or  semi-annually.     The 
bonded  indebtedness  of  any  such  town  or  village  must  not  at 
any  one  time  exceed  ten  per  cent  of  the  assessed  valuation  of 
the  real  estate  in  said  town  or  village  for  the  previous  year. 
Said  bonds  may  be  sold  at  not  less  than  par.     (2235.) 

65.  Bonds   for  Public    Improvements: — Any  town  or 
village  board  may  make  any  improvements  of  a  general  nature, 
and  to  pay  for  the  same,  may  borrow  money  and  issue  bonds 
for  the  time  and  at  the  rate  provided  in  the  previous  section 
for  funding  bonds.     (2237.) 

SCHOOL  BONDS. 

66.  The  board  of  school  trustees  of  any  school  district, 
whenever  the  majority  so  decide,  may  submit  to  a  vote  of  such 
of  the  electors  of  the  district,  as  are  freeholders  or  heads  of 
families,  the  question  of  issuing  bonds  for  the  purpose  of  pro- 
viding or  furnishing  schoolhouses  in  the  district.     Ten  days' 
written  notice  of  such  election  shall  be  posted  in  three  con- 
spicuous places  in  the  district.     If  so  authorized  by   a  ma- 
jority of  the  votes  cast  at  such  election,  the  bonds  may  be 
issued  of  such  form  as  the  board  of  trustees  may  direct,  bear- 
ing not  to  exceed  eight  per  cent  interest,  and  signed  by  the 
chairman  of  the  board  of  trustees,  and  countersigned  by  the 
clerk  of  the  school  district.     Each  bond  must  be  registered  by 


284    WASHINGTON  TERRITORY — COUNTIES — ISSUE  OF  BONDS. 

the  county  treasurer,  and  sold  at  not  less  than  par,  after  a  pub- 
lished notice  of  such  sale  for  not  less  than  four  weeks.  The 
trustees  must  provide  the  necessary  tax  for  the  payment  of  the 
interest  and  bonds  as  the  same  become  due.  (720-723.) 


WASHINGTON  TERRITORY. 

67.  County    Government: — Counties  organized  under 
the  general  laws  of  this  territory  are  managed  by  a  board  of 
three  county  commissioners,  who  hold  their  regular  sessions 
on  the  first  Mondays  of  February,  May,  August  and  Novem- 
ber, and  extra  sessions  when  required  and  ordered  as  by  law 
provided.     The  county  clerk  is  the  ex  officio  clerk  of  the  board 
of  county  commissioners.     (Statutes  of  1881,  sees.  2655-2669.) 

68.  Cities — Issue  of  Municipal  Bonds: — Seattle,  Ta- 
coma,  Olympia  and  the  other  larger  cities  are  incorporated  and 
acting  under  special  charters.     The  issue  of  municipal  bonds 
by  counties,  cities,  school  districts,  and  other  municipal  corpor- 
ations in  this  territory  has  usually  been  made  under  the  provis- 
ions of  special  acts  or  of  the  special  charters  under  which  the 
cities  are  incorporated. 


DIGEST 

OF    THE 

STATUTORY   LAWS  GOVERNING 

THE 

INVESTMENT  OF  TRUST  AND  CORPORATE  FUNDS. 

The  following  three  chapters  contain  a  digest  of  the  stat- 
utory laws  of  the  states  of  Maine,  New  Hampshire,  Vermont, 
Massachusetts,  Rhode  Island,  Connecticut,  New  York,  New 
Jersey,  Pennsylvania,  Ohio,  Indiana,  Illinois,  Michigan  and 
Wisconsin,  governing  or  relating  to  the  investment  of  the  funds 
of  Savings  Banks  (Chapter  XXIII);  Insurance  Companies 
(Chapter  XXIV);  Trust  Companies,  Guardians,  Executors, 
Administrators,  and  other  Corporate  and  Trust  Funds  (Chapter 
XXV). 

The  compilation  is  made  with  special  reference  to  the 
provisions  relating  to  the  investment  of  any  such  funds  in  the 
bonds  and  other  obligations  of  municipal  corporations. 


CHAPTER  XXIII. 


INVESTMENTS  BY  SAVINGS  BANKS. 


MAINE. 

Savings    Banks: — Savings  Banks  and  Institutions  for 
Savings  in  this  state  may  invest  their  deposits  only  as  follows: 

1 .  Municipal  Bonds: — In  the  public  funds  of  any  of  the 
New  England  states,  including  bonds  of  the  counties,   cities 
and  towns  of  the  same;  in  the  public  funds  of  the  United 
States   and   District  of  Columbia;  in  the  public  funds  of  the 
states  of  New  York,  Pennsylvania,  Maryland,  Ohio,  Indiana, 
Kentucky,   Michigan,  Wisconsin,    Minnesota,    Iowa,    Illinois, 
Missouri,  Kansas  and  Nebraska;  in  the  municipal  bonds  of 
cities  of  ten  thousand  inhabitants  or  more,  and  in  the  bonds 
(not   issued  in  aid  of  railroads)   of  counties  having  twenty 
thousand  inhabitants  or  more,  in"any  of  the  above-named  states; 
provided  that  no  investment  shall  be  made  in  city  or  county 
bonds  of  any  of  the  above-named  states  where  the  municipal 
indebtedness  of  such  city  or  county  exceeds  five  per  cent  of 
its  valuation,  except  the  city  of  St.  I^ouis,  Mo. 

2 .  Other  Bonds: — In  the  first  mortgage  bonds  of  any  com- 
pleted railroad  of  the  states  above  mentioned  or  of  New  Jersey. 
In  the  first  mortgage  bonds  of  the  Central  Pacific,  Union  Paci- 
fic, and  Northern  Pacific  railroads,  and  the  bonds  of  any  rail- 
road of  this  state.     In  the  first  mortgage  bonds  of  any  water 
company  in  Maine,  actually  engaged  in  supplying  any  city, 
town,  village  or  other  municipal  corporation  having  not  less 
than  twenty-five  hundred  inhabitants,  water  for  domestic  use 
and  fire  protection.     In  the  bonds  of  any  corporation  incorpo- 
rated under  the  authority  of  the  laws  of  Maine,  which  earns 

(286) 


MAINE — INVESTMENTS    BY   SAVINGS    BANKS.  287 

and  is  paying  a  regular  dividend  of  not  less  than  five  per  cent 
a  year. 

3.  Stocks: — In  the  stock  of  any  bank  or  banking  associ- 
ation   incorporated   under  authority  of  this  state    or  of  the 
United  States.     In  the  stock  of  any  dividend  paying  railroad 
in  New  England;  in  the  stock  of  any  railroad  in  this  state 
unencumbered  by  mortgage;  in  the  stock  of  any  corporation 
incorporated  under  the  laws  of  this  state,  which  earns  and  pays 
regular  dividends  of  not  less  than  five  per  cent  a  year.     No 
Savings  Bank  or  Institution  for  Savings  shall  hold  by  way  of 
investment,  or  as  security  for  loans,  or  both,  more  than  one-fifth 
of  the  capital  stock  of  any  corporation,  nor  invest  more  than 
ten  per  cent  of  its  deposits,  and  not  to  exceed  sixty  thousand 
dollars,  in  the  capital  stock  of  any  corporation.    These  limita- 
tions do  not  apply  to  securities  taken  under  judgments  or  in  the 
settlement  of  debts. 

4.  Mortgages: — In  loans  on  first  mortgages  on  real  estate 
in  this  state  and  New  Hampshire,  but  such  loans  shall  not  ex- 
ceed sixty  per  cent  of  the  value  of  the  property  mortgaged.  Not 
exceeding  fifty  per  cent  of  the  deposits  shall  be  invested  in 
mortgages.     This  limitation  does  not  apply  to  property  taken 
under  foreclosure.     All  expenses  incurred  in  taking  mortgages 
shall  be  paid  by  the  borrower. 

5.  Loans: — In  loans  to  any  county,  city  or  town  in  this 
state  and  New  Hampshire.     In  loans  with  a  pledge  as  collat- 
eral of  any  of  the  securities  above  mentioned,  of  savings  bank 
deposit  books  of  any  savings  bank  in  this  state,  or  of  the  stock 
of  any  of  said  railroad  companies,  but  not  exceeding  seventy- 
five  per  cent  of  the  market  value  of  such  stock.     In  loans 
to  corporations  having  real  estate  and  doing  business  in  this 
state.     In  loans  on  a  pledge  or  mortgage  of  such  other  per- 
sonal property  as  the  trustees  may  consider  safe.     No  loan 
shall  be  made  directly  or  indirectly  to  any  of  the  trustees. 

6.  Real  Estate: — In  real  estate  to  an  amount  not  exceed- 
ing five  per  cent  of  the  deposits,  but  no  part  of  said  amount 
shall  be  invested  in  real  estate,  except  in  a  suitable  building  for 


288          NEW    HAMPSHIRE — VERMONT — SAVINGS    BANKS. 

banking  purposes;  provided  that  the  amount  so  invested  shall 
not  exceed  one  hundred  thousand  dollars. 

7.  Deposits: — Deposits  may  be  made  on  call  in  banks 
incorporated  under  the  laws  of  Maine  or  of  the  United  States 
and  interest  may  be  received  on  the  same.  (Statutes  of  1883, 
Chap.  47,  Sees.  100-105,  as  amended  by  Chap.  142,  Laws  of 
1887.) 


NEW  HAMPSHIRE. 


8.  Savings  Banks: — Deposits — Loans: — Savings  banks 
may  deposit  their  funds  in  national  banks  of  good  credit  and 
unimpaired  capital,  the  same  as  any  other  depositor.  No  sav- 
ings bank  shall  loan  to  any  person,  corporation,  or  firm 
(including  its  individual  members)  an  amount  in  excess  of  ten 
per  cent  of  the  deposits  and  accumulations  of  such  savings 
bank;  nor  purchase  or  hold  both  by  way  of  investment  and 
security  for  loans,  the  stock  and  bonds  of  any  corporation  to 
an  amount  in  excess  of  such  ten  per  cent.  No  loan  can  be 
made  to  any  officer,  nor  can  any  officer  become  a  surety  on  any 
loan  without  the  written  consent  of  all  the  trustees.  (Statutes 
of  1878,  chap.  170,  as  amended  by  chap.  7,  Laws  of  1881.) 


VERMONT. 


Savings  Banks  and  Trust  Companies1: — Savings 
Banks,  Savings  Institutions  and  Trust  Companies  in  this  state 
shall  invest  their  funds  as  follows: 

9.  Municipal  Obligations: — In  the  public  funds  of  the 
United  States,  or  public  funds  for  which  the  faith  of  the  United 
States  is  pledged  to  provide  for  the  payment  of  interest  and 
principal.  In  the  public  funds  of  any  of  the  New  England 
states,  including  the  bonds  or  notes  of  the  counties,  cities, 

1  By  act  of  1886,  p.  68,  it  is  provided  that  every  moneyed  institution 
in  this  state,  soliciting  or  receiving  money  in  a  trust  capacity  and  paying 
interest  thereon,  shall  be  amenable  to  the  laws  regulating  savings  banks 
and  trust  companies. 


VERMONT — SAVINGS  BANKS  AND  TRUST  COMPANIES.         289 

towns,  villages  and  school  districts  of  the  same.  In  the  mu- 
nicipal bonds,  not  issued  in  aid  of  railroads,  of  cities  of  five  thou- 
sand inhabitants  or  more  whose  municipal  indebtedness  is  not 
allowed  by  law  to  exceed  and  does  not  exceed  five  per  cent  of 
its  assessed  valuation,  in  the  states  of  California,  Illinois,  Indi- 
ana, Iowa,  Kansas,  Michigan,  Minnesota,  Missouri,  Nebraska, 
New  Jersey,  New  York,  Ohio,  Pennsylvania  and  Wisconsin, 
and  in  the  public  funds  of  each  of  the  above-named  states,  also 
in  the  county  bonds  of  the  same  states,  when  not  issued  in  aid 
of  railroads,  where  the  municipal  indebtedness  of  such  county 
is  not  allowed  by  law  to  exceed  and  does  not  exceed  five  per 
cent  of  its  assessed  valuation.  In  the  school  bonds  and  inde- 
pendent school  district  bonds  in  the  states  of  Illinois,  Indiana, 
Iowa,  Kansas,  Michigan,  Minnesota,  Missouri,  Nebraska,  New 
JersejT,  New  York,  Ohio,  Pennsylvania  and  Wisconsin,  when 
the  amount  of  such  bonds  issued  is  not  allowed  by  law  to 
exceed  and  does  not  exceed  five  per  cent  of  the  assessed  valu- 
ation of  the  respective  school  districts,  towns  or  cities  issuing 
the  same. 

10.  Real  Estate  Mortgages: — Not  more  than  seventy  per 
cent  of  the  assets  may  be  loaned  upon  first  mortgages  on  unen- 
cumbered real  estate  to  an  amount  not  exceeding  three-fifths 
of  the  cash  value  thereof,  and  in  case  such  real  estate  is  unim- 
proved or  unproductive,  not  exceeding  forty  per  cent  thereof. 
Not  less  than  one  sixth  of  the  amount  so  loaned  shall  be  upon 
property  within  the  state.     When  buildings  are  included  in 
the  valuations,  they  shall  be  insured  and  the  policies  assigned 
to  mortgagee.     No  mortgage  investment  shall  be  made  except 
upon  the  report  of  a  committee  of  the  trustees  or  their  board 
of  investment. 

11.  Stocks: — Such  funds  may  be  invested  in  the  stock  of 
any  bank,  banking  association  or  trust  company  incorporated 
under  the  authority  of  the  United  States,   or  of  any  of  the 
New  England  states  or  of  New  York. 

12.  Personal  Security: — No  loans  or  investments  on  per- 
sonal security  shall  be  made  except  upon  at  least  two  approved 


VERMONT SAVINGS  BANKS  AND  TRUST  COMPANIES. 

names,  not  less  than  two  of  whom  reside  in  this  state,  or  within 
fifty  miles  of  the  institution  making  such  investment;  and  such 
personal  loans  or  investments  shall  not  be  for  a  longer  time 
than  one  year,  and  not  more  than  one-third  of  the  assets  of  a 
savings  bank,  savings  institution  or  trust  company,  shall  be 
invested  in  personal  securities.  Officers  and  trustees  are  not 
allowed  to  borrow  funds  directly  or  indirectly  or  become  sure- 
ties for  loans,  to  exceed  five  per  cent  of  the  paid  in  capital 
stock,  nor  without  the  written  consent  of  a  majority  of  the 
directors.  No  loan  shall  be  made  to  any  one  person,  corpora- 
tion, firm  or  company,  or  the  individual  members  of  such  corn- 
pan}-,  to  exceed  five  per  cent  of  the  net  amount  of  deposits, 
nor  more  than  thirty  thousand  dollars,  nor  shall  such  loan  on 
personal  security  exceed  ten  thousand  dollars. 

13.  Loans: — L,oans  may  be  made  with  a  pledge  as  collat- 
eral of  any  securities  which  can  be  legally  purchased,  or  on 
deposit  books  or  deposit  receipts,  issued  by  any  savings  bank, 
trust   company  or  banking  association   located  in   Vermont, 
such  notes  not  to  exceed  the  par  value  nor  the  market  value  of 
such  collateral  security.     No  savings  institution  shall  hold  by 
way  of  investment  and  as  security  for  loans,  more  than  ten  per 
cent  of  the  capital  stock  of  any  one  bank,  banking  association, 
or  trust  company,   nor  invest  more  than  ten  per  cent  of  its 
deposits,  nor  more  than  thirty-five  thousand  dollars,   in  the 
capital  stock  of  any  such  bank,  banking   association  or  trust 
company,  and  no  investments  shall  be  made  in  the  capital 
stock  of  such  banks,  banking  associations  or  trust  companies, 
owned   or   loaned   upon,    to   exceed   in   the  aggregate,    one- 
fourth  of  the  deposits  of  such  savings  bank    or  trust  com- 
pany.    No  loan  can  be  made  by  such  corporation  upon  the 
pledge  of  its  own  stock. 

14.  Real  Estate: — Three  per  cent  of  the  deposits  may  be 
invested  in  a  suitable  lot  of  land  and  building  for  the  conven- 
ient transaction  of  its  business.     Such  other  real  estate  only 
may  be  held  as  may  be  acquired  by  the  foreclosure  of  mort- 
gages thereon,  pledged  to  such  corporation;  or  taken  in  settle- 


MASSACHUSETTS — INVESTMENTS  BY  SAVINGS  BANKS.      29 1 

ments  effected  to  secure  debts.  All  such  real  estate  shall  be 
sold  by  such  corporation  as  soon  as  a  reasonable  price  can  be 
obtained  therefore,  and  within  five  years  after  title  is  vested  in 
such  corporation. 

15.  Deposits: — Deposits  may  be  made  by  savings  banks, 
savings  institutions  or  trust  companies  on  call,  with  or  without 
interest  in  banks  or  trust  companies,  in  the  cities  of  New  York, 
Boston  or  Chicago,  in  sums  not  exceeding  in  the  aggregate 
twenty  per  cent  of  the  assets  of  such  savings  bank,  savings 
institution  or  trust  company.  (I,aws  of  1884,  pp.  33-44.) 


MASSACHUSETTS. 


{From  Chap.  //6,  Statutes  of  1882,  with  amendments  as  noted.) 
Savings  Banks: — Deposits  and  the  income  derived  there- 
from shall  be  invested  only  as  follows: 

1 6.  Mortgages: — In  first  mortgages  on  real  estate  situated 
in  Massachusetts,  as  by  law  provided,  to  an  amount  not  to 
exceed  sixty  per  cent  of  the  valuation  of  such  real  estate;  but 
not  exceeding  seventy  per  cent  of  the  whole  amount  of  deposits 
shall  be  so  invested. 

17.  Municipal  Obligations: — In  the  public  funds  of  the 
United  States,  or  any  of  the  New  England  states,  or  of  the 
state  of  New  York;  in  the  bonds  or  in  notes  of  any  city,  county 
or  town  of  this  state,  or  of  any  city  of  the  states  of  Maine, 
New  Hampshire,   Vermont,    Rhode  Island,    or   Connecticut, 
whose  net  indebtedness  does  not  exceed  five  per  cent  of  the  last 
preceding  valuation  of  the  property  therein  for  the  assessment 
of  taxes;  or  of  any  county  or  town  thereof  whose  net  indebt- 
edness does  not  exceed  three  per  cent  of  such  valuation;  or  in 
the  notes  of  any  citizen  of  this  state  with  a  pledge  as  collateral 
of  any  of  the  aforesaid  securities  at  no  more  than  the  par  value 
thereof.     In  the  bonds  and  notes  of  any  incorporated  district 
in  Massachusetts  whose  net  indebtedness  does  not  exceed  five 
per  cent  of  the  last  preceding  valuation  of  the  property  therein 
for  the  assessment  of  taxes.     (Acts  of  1885,  chap,  in.)     In 


292     MASSACHUSETTS — INVESTMENTS  BY  SAVINGS  BANKS. 

the  legally  authorized  bonds  of  the  states  of  Pennsylvania, 
Ohio,  Michigan,  Indiana,  Illinois,  Wisconsin  and  Iowa,  and  of 
the  District  of  Columbia;  and  in  the  legally  authorized  bonds 
for  municipal  purposes  of  any  city  of  the  aforesaid  states,  and 
in  the  state  of  New  York,  which  has  at  the  date  of  such  invest- 
ment more  than  thirty  thousand  inhabitants,  as  established  by 
the  last  national  or  state  census,  or  city  census  (certified  to  by 
the  city  clerk  or  treasurer  and  taken  in  the  same  manner  as  a 
national  or  state  census)  preceding  such  investment,  and  whose 
net  indebtedness  does  not  exceed  five  per  cent  of  the  taxable 
property  therein,  to  be  ascertained  by  the  last  assessment  for 
taxes;  and  in  the  notes  of  any  citizen  of  this  state,  with  a 
pledge  as  collateral  of  any  of  the  aforesaid  securities,  the 
amount  loaned  not  to  exceed  eighty  per  cent  of  the  market 
value  of  the  securities  pledged.  (Acts  of  1888,  chap.  90.) 

18.  Railroad  Bonds,  Stocks  and  Notes: — In  the  first  mort- 
gage bonds  of  any  railroad  company  incorporated  under  the 
authority  of  any  of  the  New  Bngland  states,  and  whose  road 
is  located  wholly  or  in  part  in  the  same,  and  which  is  in  pos- 
session of  and  operating  its  own  road,  and  has  earned  and  paid 
regular  dividends  for  the  two  years  next  preceding  such  invest- 
ment; or  in  the  first  mortgage  bonds,  guaranteed  by  any  such 
railroad  company,  of  any  railroad  company  so  incorporated 
whose  road  is  thus  located;  or  in  the  bonds  or  notes  of  any 
railroad  company  incorporated  under  the  laws  of  this  state,  and 
whose  road  is  located  wholly  or  in  part  therein,  and  is  unen- 
cumbered by  mortgage,  and  which  has  paid  a  dividend  of  not 
less  than  five  per  cent  per  annum  for  the  preceding  two  years; 
or  in  the  notes  of  any  citizen  of  this  state,  with  a  pledge  as 
collateral  of  any  of  the  aforesaid  securities  at  not  more  than  the 
par  value  thereof;  or  in  the  notes  of  any  citizen  of  Massachusetts, 
with  a  pledge  as  collateral,  of  the  shares  of  the  capital  stock  of 
any  railroad  company  incorporated  under  the  authority  of  any 
of  the  New  England  states,  and  whose  road  is  located  wholly 
or  in  part  therein  and  which  is  in  possession  of  and  operating 
its  own  road,  and  has  earned  and  paid  regular  dividends  of  not 


MASSACHUSETTS — INVESTMENTS  BY  SAVINGS  BANKS.      293 

less  than  five  per  cent  per  annum  on  all  its  issues  of  capital 
stock  for  five  years  next  preceding  the  date  of  such  notes  or 
any  renewal  thereof,  and  at  no  more  than  seventy-five  per  cent 
of  the  market  value  thereof,  such  notes  to  be  made  payable  on 
demand  and  to  be  paid  or  renewed  within  one  year  of  the  date 
thereof;  but  street  railway  companies  shall  not  be  considered 
railroad  companies  within  the  meaning  of  this  section  (Acts 
of  1887,  chap.  196,  as  amended  by  chap.  213,  Acts  of  1888).  In 
the  bonds  and  notes  of  the  old  Colony  Railroad  Company  issued 
according  to  law,  notwithstanding  the  mortgages  on  that  part 
of  its  railroad  formerly  belonging  to  the  Boston,  Clinton,  Fitch- 
burgh  &  New  Bedford  Railroad  Company  (Acts  of  1883, 
chap.  134).  In  the  bonds  and  notes  of  the  Fitchburgh  Rail- 
road Company  issued  according  to  law  (Acts  of  1887,  chap. 
113).  In  the  legally  issued  bonds  and  notes  of  the  Worcester, 
Nashua  &  Rochester  Railroad  Company,  notwithstanding  the 
said  railroad  is  leased  to  the  Boston  &  Maine  Railroad  Com- 
pany. (Acts  of  1886,  chap.  176).  In  the  bonds  and  notes  of 
the  Boston  &  L,owell  Railroad  Company,  notwithstanding  the 
mortgage  on  those  portions  of  its  railroad  formerly  belonging 
to  the  Salem  &  I,owell  Company. 

19.  Bank  Stock: — In  the  stock  of  any  bank  incorporated 
under  the  authority  of  Massachusetts  or  of  the  United  States 
when  located  in  the  New  England  states,  or  on  the  notes  of 
any  citizen  of  Massachusetts  with  any  of  the  aforesaid  securi- 
ties as  collateral  at  no  more  than  eighty  per  cent  of  the  market 
value  and  not  exceeding  the  par  value  thereof;  provided,  that 
such  corporation  shall  not  hold,  both  by  way  of  investment 
and  as  security  for  loans,  more  than  one  quarter  of  the  capital 
stock  of  any  one  bank  or  banking  association,  nor  invest  more 
than  three  per  cent  of  its  deposits  nor  more  than  one  hundred 
thousand  dollars  in  the  capital  stock  of  any  one  such  bank  or 
association;  provided  also  that  such  corporation  shall  not 
hold  as  collateral  or  invest  in  stocks  or  bonds,  as  above  described, 
more  than  thirty-five  per  cent  of  its  deposits.  (As  amended  by 
chap.  224,  Acts  of  1882;  and  chap.  202,  Acts  of  1883.) 


294     MASSACHUSETTS — INVESTMENTS  BY  SAVINGS  BANKS. 

20.  Personal  Loans: — In  loans  upon  the  personal  notes  of 
any  depositor  of  the  corporation,  not  exceeding  one-half  of  the 
amount  of  his  deposit,   the  deposit  and  the  book  of  the  depos- 
itor to  be  held  by   the  corporation  as  collateral  security.     If 
such  deposits  and  income  cannot  be  conveniently  invested  in 
the  modes   hereinbefore  prescribed,    not  exceeding  one-third 
part  thereof  may  be  invested  in  bonds  or  other  personal  secur- 
ities, payable  and  to  be  paid  in  not  exceeding  one  year,  with 
at  least  two  sureties, the  principal  and  sureties  to  be  resident 
citizens.    Provided  the  aggregate  loans  to  any  person,  partner- 
ship, company  or  corporation  (the  members  of  any  partnership 
or  unincorporated  company  to  be  included  in  estimating  the 
loans  thereto  )  upon  personal  security,  shall  at  no  time  exceed 
five  per  cent  of  such  deposits   and   income.       No  officer  or 
member  of  the  investing  committee  can  borrow  from,   or   be 
surety  on  any  loan  made  by  any  such  bank.     (Acts  of  1884, 
chap.    1 68,   as  amended  by  chap.   69,  Acts  of  1886.) 

2 1 .  Real  Estate: — Ten  per  cent  of  the  deposits  of  any  such 
corporation,  but  not  exceeding  two  hundred  thousand  dollars, 
may  be  invested  in  the  purchase  of  a  suitable  site  and  the 
erection  or   preparation  of   a    suitable  building    for  the  con- 
venient transaction  of  its  business.     Such  further  real  estate 
only  may  be  held  as  may  be  taken  in  settlement  of  contracted 
debts  and  the  same  must  be  sold  within  five  years  from  time  of 
acquiring  title,  unless  by  special  permission  of  the  commis- 
sioners. 

22.  Deposits: — Savings  Banks  may  deposit  not  to  exceed 
twenty  per  cent  of  the  amount  of  their  deposits,  on  call,  in 
such  banks  or  banking  associations,  or  in  any  trust  company, 
incorporated  under  the   laws  of  Massachusetts,which  provide 
the  same  security  as  banking  associations  incorporated  under 
the  authority  of  the  United  States,  and  may  receive  interest 
for  the  same.     Savings  banks  or  institutions  shall  not  deposit 
more  than  five  per  cent   of  their  total  deposits  in  any   one 
national  bank  or  trust  company,  nor  an   amount   exceeding 
twenty -five  per  cent  of  the  capital  stock  and  surplus  of  such 


RHODE    ISLAND — CONNECTICUT — SAVINGS    BANKS.         295 

national  bank  or  trust  company.     (As  amended  by  chap.  95, 
Acts  of  1886.) 


RHODE   ISLAND. 


Savings  Banks  : — Institutions  for  savings  in  this  state 
may  invest  their  funds: 

23.  Bonds,  Stocks,  Etc.: — In  the  public  stocks  or  bonds  of 
any  state,  or  of  the  United  States;  in  any  bank  stock;  in  notes 
or  bonds  of  any  town  or  city;  in  notes  of  any  school  district  or 
fire  district  in  any  New  England  state;  or  in  such  corporate 
stocks  or  bonds  as  they  may  deem  safe  and  secure. 

24.  Loans: — They  may  discount  notes,  bonds  or  drafts  of 
individuals  or  corporations,  with  two  other  responsible  indors- 
ers  or  sureties,  or  secured  by  public  stocks  or  bonds  of  any 
state,  town  or  city,  or  of  any  school  district  or  fire  district  in 
any  New  England  state;  by   any   corporate  stocks  or  bonds 
deemed  safe;  or  by  mortgage  on  real  estate. 

25.  Restrictions: — No  institution  for  savings  shall  have 
an  amount  exceeding  one  half  of  its  receipts  invested  in  dis- 
counts on  notes,  bonds  or  drafts  of  individuals  or  corporations 
unless  secured  by  some  public  notes,  bonds  or  stocks  as  afore- 
said, or  by  real  estate  mortgages.     No  loan  shall  be  made  to 
any  officer,  director  or  trustee.     (Statutes  of  1882,  p.  379.) 


CONNECTICUT. 


Savings  Banks: — In  this  state  such  banks  may  invest 
not  exceeding  one-half  of  their  deposits: 

26.  Municipal  Obligations: — In  the  public  stock  or  bonds 
of  the  United  States,  of  any  of  the  New  England  states,  of  the 
states  of  New  York,  New  Jersey,  Pennsylvania,  Ohio,  Ken- 
tucky, Michigan,  Indiana,  Illinois,  Wisconsin,  Iowa,  Missouri, 
Kansas,  Nebraska,  or  of  the  District  of  Columbia;  in  the  au- 
thorized bonds  of  any  incorporated  city  in  the  New  England 
states,  of  the  cities  of  New  York,  Brooklyn,  Albany,  Syra- 


296       CONNECTICUT — INVESTMENTS    BY   SAVINGS    BANKS. 

cuse,  Utica,  Troy,  Rochester,  and  Buffalo,  in  the  state  of  New 
York,  Philadelphia,  in  the  state  of  Pennsylvania,  Detroit,  in 
the  state  of  Michigan,  Cleveland,  Columbus,  Dayton  and  Cin- 
cinnati, in  the  state  of  Ohio,  Chicago,  in  the  state  of  Illinois, 
Milwaukee,  in  the  state  of  Wisconsin,  and  St.  Louis,  in  the 
state  of  Missouri,  or  of  any  town  or  borough  in  this  state,  or 
in  the  purchase  of  the  authorized  promissory  notes  of  towns, 
cities,  boroughs  and  school  districts  of  this  state. 

27.  Railroad  Bonds: — In  the  first  mortgage  bonds  of  any 
railroad  company  located  in  any  of  the  states  aforesaid,  which 
has  paid  dividends  of  not  less  than  five  per  cent  per  annum 
regularly  on  its  entire  capital  stock  for  a  period  of  not  less 
than  five  years  next  previous  to  the  purchase  of  such  bonds, 
or  in  the  consolidated  bonds  of  any  railroad  company  incor- 
porated by  this  state,   authorized  to  be  issued  to  retire  the 
entire  bonded  debt  of  said  company,   provided  said  company 
has  paid  dividends  as  aforesaid. 

28.  Bank  Stock: — In  the  stock  of  any  bank  in  this  state, 
New  York  city,  or  Boston,  or  in  the  stock  of  any  trust  com- 
pany in  the  cities  of  Hartford  or  New  Haven. 

29.  Real  Estate  Mortgages: — All  other  loans  shall  be  se- 
cured by  mortgages  on  unencumbered  real  estate  in  this  state, 
worth  double  the  amount  of  the  loan  secured  thereby.     No 
loan  shall  be  made  by  any  savings  bank  to  a  manufacturing 
corporation  or  ecclesiastical  society,  secured  by  mortgage  upon 
its  property,  unless  the  same  shall  be  accompanied  by  the  indi- 
vidual guaranty  of  some  responsible  party  or  parties,  or  by 
other  collateral  security  of  equal  value  to  the  amount  of  the 
sum  loaned.     Loans  and  investments  in  authorized  municipal 
bonds  and  obligations  may  be  classed  with  loans  upon  real 
estate  for  the  purpose  of  determining  the  proportion  of  loans 
required  upon  such  estate. 

30.  Personal  Loans: — In  making  loans  on  personal  security, 
no  savings  bank  having  more  than  twenty-five  thousand  dol- 
lars deposits  shall  loan  on  personal  security  to  any  person, 
company,  or  interest,  more  than  three  per  cent  of  its  deposits, 


NEW   YORK — INVESTMENTS    BY   SAVINGS    BANKS.          297 

at  the  time  of  making  such  loan.  No  such  bank  shall  buy  or 
lend  any  money  upon  any  obligation  on  which  only  one  person 
or  firm  shall  be  holden,  without  taking  additional  security, 
equivalent  to  the  guaranty  or  indorsement  of  some  responsible 
person.  No  officer  of  such  bank  can  be  a  borrower  or  security 
on  any  loan.  (Statutes  of  1888,  sees.  1800-1811.) 


NEW  YORK. 


Savings  Banks: — The  trustees  of  any  savings  bank  or 
institution  for  savings  in  this  state  shall  invest  the  moneys 
deposited  therein  only  as  follows: 

31.  Municipal    Bonds: — In  the  stocks   or    bonds,    or 
interest  bearing  notes  or  obligations  of  the  United  States,  or 
those  for  which  the  faith  of  the  United  States  is  pledged  to 
provide  for  the  payment  of  principal  and  interest,  including 
the  bonds  of  the  District  of  Columbia,  commonly  known  as 
three  sixty-five  bonds;     in    the  stocks   or    bonds  or  interest 
bearing  obligations  of  this  state,  issued  pursuant  to  any   law  of 
this   state;  in  the   stocks    or   bonds,  or  interest  bearing  obli- 
gations of  any   other  state  that  has  not   within    ten   years 
previously   defaulted  in  the  payment   of  any    part  of  either 
principal  or  interest  of  any  debt  authorized  by  the  legislature 
of  such  state;  or  in  the  stocks  or  bonds  of  any  city,  county, 
town  or  village,   or  in  the  interest  bearing  obligations  of  any 
city  or  county  of  this  state,  issued  under  the  authority  of  any 
law  of  this  state.     Not  to  exceed  ten  per  cent  of  such  deposits 
may  be  invested  in  municipal    railroads   aid  bonds,  issued  as 
provided  by  chapter  907  of  the  Laws  of  1869  as  amended  in 
1871. 

32.  Real  Estate  Mortgages: — In  bonds  and  mortgages  on 
unencumbered  real  estate  situated  in  this  state,  and  worth  at 
least    twice  the   amount  loaned   thereon,  but  not  to  exceed 
sixty  per  centum  of  the  whole  amount  of  deposits  shall  be  so 
loaned,  and  in  case  the  loan  is  on  unimproved  and  unpro- 


298          NEW   YORK — INVESTMENTS    BY    SAVINGS    BANKS. 

ductive  real  estate,  the  amount  loaned  thereon  shall  not  be 
more  than  forty  per  centum  of  its  actual  value;  and  no  invest- 
ment in  bond  and  mortgage  shall  be  made  except  on  report  of 
the  proper  committee  of  trustees.  (As  amended  by  Laws  of 
1887,  chap.  524.) 

33.  Restrictions  on  Loans: — No  loans  can  be  made  upon 
notes,  bills  of  exchange,  drafts,  or  any  other  personal  securities 
whatever.     No  officer  or  trustee  can  directly  or  indirectly  bor- 
row from  or  be  a  surety  for  any  loan  made  by  any  such  savings 
bank. 

34.  Real  Estate: — Such  real  estate  may  be  held  as  may 
be  necessary  for  the  convenient  transaction  of  its  business,  and 
from  portions  of  which,  not  required  for  its  own  use,  a  revenue 
may    be   derived,  the   cost  of   such  property    not   to  exceed 
fifty  per  centum  of  the  net  surplus  of  such  corporation,  except 
by  written  permission  of  the  superintendent  of  the  banking 
department;  and  such  as  may  betaken  in  settlement  or  foreclos- 
ure of  debts  previously  contracted,  to  be  disposed  of  within  five 
years  after  acquiring  title,  except  by  special  permission.    (L,aws 
of  1882,  chap.  409,  sees.  255,  263,  264.) 

35.  Deposits: — It  shall  be  the  duty  of  the  trustees,  as  soon 
as  practicable,  to  invest  moneys  deposited  with  them  in  the 
securities  above  provided,  except,  that  to  meet  current  expenses, 
a  sum  not  exceeding  ten  per  cent  of  the  whole  amount  of 
deposits  may  be  kept  on  hand  or  with  any  bank  or  banking 
association  organized  under  the  laws  of  this  state,  or  of  the 
United  States,  or  with  any  trust  company  incorporated  under 
the  laws  of  this  state,  but  the  sum  so  deposited  with  any  one 
bank  or  trust  company  shall  not  exceed  twenty-five  per  cent  of 
the  paid  up  capital  and  surplus  of  such  bank  or  trust  company; 
or  such  available  fund  may  be  loaned  upon  a  pledge  of  the  said 
municipal  stocks  or  bonds,  but  not  in  excess  of  ninety  per 
cent  of  their  market  value.     (As  amended  by  I/aws  of  1886, 
chap.  569.) 


NEW  JERSEY — INVESTMENTS    BY   SAVINGS    BANKS.        299 

NEW  JERSEY. 


(From  Statutes  of  1877,  pp.  1061-1063,  with  amendments  as  indicated.) 
Savings  Banks  : — Funds  deposited  with  savings  banks, 
or  savings  institutions,  whether  incorporated  under  a  general 
or  a  special  act,  can  be  invested  only  as  follows: 

36.  Municipal  Obligations: — In  the  stocks,  bonds  or  inter- 
est bearing  notes  or  obligations  of  the  United  States,  or  for 
which  the  faith  of  the  United  States  is  distinctly  pledged  for 
the  payment  of  principal  and  interest;  in  the  interest  bearing 
bonds  of  this  state;  in  the  bonds  of  any  state  that  has  not 
within  ten  years  previously  defaulted  in  the  payment  of  prin- 
cipal or  interest  of  any   debt  authorized   by   the   legislature 
thereof;  in  the  stocks  or  bonds  of  any  city,  town,  county  or 
village  of  this  state,  or  of  the  cities  of  New  York,  Brooklyn, 
or  Philadelphia;  in  the  interest  bearing  obligations, other  than 
those  commonly  known  as  improvement  certificates,  issued  by 
the   city,  town   or  borough  in  which  such  bank  is  situated 
(Laws  1881,  chap.  218).     In  the  legally  authorized  bonds  of 
any  city  or  county  of  any  state  of  the  United  States,  provided 
such  city  or  county  has  not  within  ten  years  previously  defaulted 
in  the  payment  of  principal  or  interest  of  any  debt  authorized 
by  law,  and  provided  that  the  total  debt  of  such  city  or  county 
is  limited  by  law  to  ten   per  cent  of  its   assessed  valuation. 
(L/aws  1886,  chap.  126.) 

37.  Real  Estate  Mortgages: — Not  exceeding  eighty  per 
cent  of  the  deposits  of  such  a  bank  may  be  loaned  on  mort- 
gages which  are  a  first  lien  on  real  estate  within  this  state, 
worth  at  least  double  the  amount  loaned  thereon,  but  loans  on 
unproductive  or  unimproved  real  estate  shall  not  exceed  thirty 
per    cent    of   the    actual    value    thereof.       (Laws    of    1881, 
chap.  218.) 

38.  Collateral  Loans: — No  loans  shall  be  made  upon  notes, 
bills  of  exchange,  or  drafts,  except  upon  the  additional  pledge 
of  collateral  security,  which  shall  be  of  the  same  nature  and 
character  as  those  in  which  investments  may  be  made,  or  the 


300       NEW  JERSEY — INVESTMENTS    BY   SAVINGS    BANKS. 

stock  of  national  or  state  banks  or  other  corporations  of  this 
state,  which  have  not  defaulted  in  the  payment  of  interest 
dividends  within  two  years  previously.  No  loan  shall  exceed 
ninety  per  cent  of  the  par  value  of  the  collateral  pledged,  and 
the  total  amount  of  such  loans  shall  not  exceed  fifteen  per  cent 
of  the  deposits.  A  violation  of  any  of  the  provisions  of  this 
act  by  trustees,  directors,  managers  or  officers  is  made  a  mis- 
demeanor. No  loan  shall  be  made  to  any  officer  of  the  bank. 
(Laws  1878,  chap.  254.) 

39.  Real  Estate: — Only  such  real  estate  may  be  held  as 
may  be  requisite  for  the  convenient  transaction  of  its  business, 
and  from  such  portion  of  which  a  revenue  may  be  derived. 
The  cost  of  such  property  shall  not  exceed  fifty  per  cent   of 
the  net   surplus  of  the   corporation.      They   may  hold  such 
further  real  estate  as  may  be  taken  upon  judgments,  foreclos- 
ures, or  in  the  settlement  of  debts,  to  be  disposed  of  within 
five  years,  except  by  special  permission  from  the  state  board  of 
supervison.     (Laws  of  1881,  chap.  218.) 

40.  Deposits: — It  is  made  the  duty  of  the  managers  to 
invest  their  funds  as  above  as  soon  as  practicable.     To  meet 
current  expenses  they  may  keep  not  to  exceed  ten  per  cent  of 
their  deposits  on  hand,  or  on  deposit  in  any  bank  or  banking 
association  in  this  state,  organized  under  the  laws  of  this  state 
or  of  the  United  States;  or  deposited,  on  call,  at  interest,  in 
such  solvent  trust  company  or  safe  deposit  company,  incorpor- 
ated under  the  laws  of  this  state,  or  of  the  states  of  New  York 
or  Pennsylvania,  as  a  majority  of  the  managers  may  direct  by 
a  resolution  duly  passed.     Such  funds  may  be  loaned  upon  the 
pledge   of  any   of  the  said  municipal  obligations  mentioned 
under  section  36  above,  but  not  to  exceed  seventy-five  per  cent 
of  their  market  value,  and  not  exceeding  the  par  value  thereof. 
(Laws  of  1883,  chap.  116.) 

PENNSYLVANIA. 


41.     Savings  Banks: — In  1885  an  act  was  passed  provid- 
ing for  the  renewal  of  the  charters  of  provident  institutions, 


PENNSYLVANIA OHIO — SAVINGS    BANKS.  30 1 

savings  institutions,  and  savings  banks,  to  remove  a  doubt 
arising  under  the  Constitution,  as  to  charters  thereof  running 
over  twenty  years,  in  which  act  it  is  provided  that  an}-  such 
provident  institution  or  savings  bank  having  no  capital  stock, 
renewing  or  extending  its  charter  under  such  act,  shall  not 
thereafter  be  allowed  the  privilege  of  a  bank  of  discount,  nor 
be  allowed  to  loan  any  of  its  deposits,  except  upon  first  mort- 
gages or  liens  upon  real  estate  within  this  state,  upon  the 
bonds  or  securities  of  the  United  States,  or  of  this  state,  or 
upon  the  county,  city,  borough,  township  or  school  bonds  of 
any  such  municipality  within  this  state,  or  upon  any  other 
good  and  valid  security.  (L,a\vs  of  1885,  p.  201.) 


OHIO. 

Savings   and  Loan   Associations : — They  may  invest 
their  funds: 

42.  Stocks  and  Bonds: — In  the  purchase  of  stocks,  bonds 
or  other  evidences  of  the  indebtedness  of  the  United  States; 
stocks  and  bonds  of  the  state  of  Ohio;  bonds  of  any  municipal 
corporation  of  this  state,  or  school  bonds  of  any  municipal 
corporation,  special  school  district  or  body  politic  in  this  state, 
issued  pursuant  to  law,  or  of  bonds  so  issued  by  county  com- 
missioners within  this  state,  to  such  an  amount  as  may  be 
deemed  proper;  or  of  the  stocks  or  bonds  of  any  state  that  has 
for  five  years  immediately  preceding  such   investment,  paid 
the  interest  on  its  bonded  debt;  to  the  extent  often  per  cent  of 
their  paid  in  capital  and  deposits. 

43.  Real  Estate  Loans: — In  bonds  or  notes  secured  by 
mortgages  on  unencumbered  real  estate  situate  in  the  county 
where   the  association  is  located,    or    any  adjoining  county 
in  this  state,  worth,  exclusive  of  buildings,  at  least  double  the 
amount  loaned  thereon,  unless  accompanied  with  insurance 
upon  the  buildings  thereon  that  will  make  the  value  of  the 
real  estate  and  insurance  at  least  double  such  loan,  but  not 
more  than  fifty  per  cent  of  the  amount  of  the  paid  in  capital 


302  OHIO — INDIANA — SAVINGS    BANKS. 

and  deposits  of  any  such  association   shall   at   any   time   be 
invested  in  such  real  estate  securities. 

44.  Personal  Loans: — Such  associations  may  discount 
notes  and  bills  of  exchange,  and  charge  upon  any  loan  or  dis- 
count made  any  legal  interest.  The  total  liabilities  of  any 
person,  company,  corporation  or  firm,  directly  or  as  indorser, 
to  such  association  for  money  borrowed,  including  in  the  liabil- 
ities of  a  company  or  firm,  the  liabilities  of  the  members  thereof, 
shall  at  no  time  exceed  one-fifth  part  of  the  paid  up  capital  stock 
of  such  association,  but  the  discount  of  bills  of  exchange  drawn 
against  existing  values,  and  of  commercial  or  business  paper, 
owned  by  the  person,  company,  corporation  or  firm  negotiating 
the  same,  shall  not  be  construed  as  money  borrowed.  No 
director  or  other  officer  shall  borrow  or  use  the  funds  of  the 
corporation,  except  to  pay  necessary  current  expenses,  to  an 
amount  greater  than  one-half  of  the  stock  by  him  owned  or 
held;  nor  shall  any  officer  or  director  be  surety  for  any  loan 
made  by  such  corporation.  (Statutes  of  1880,  sees.  3802-3812, 
as  amended  by  Laws  of  1888,  p.  288.) 


INDIANA. 


Savings  Banks  : — The  trustees  of  any  savings  bank  in 
this  state  may  invest  the  deposits  thereof  only: 

45.  Municipal    Obligations: — In   the   stocks,    bonds   or 
treasury  notes  of  the  United  States,  in  the  stocks  or  bonds  of 
this  state;  in  the  legally  issued  orders  or  bonds  of  any  county, 
city  or  town  in  this  state;  or  in  the  stocks  or  bonds  of  any  state 
that  has  for  ten  years  previously  regularly  paid  the  interest  on 
its  legal  bonded  debt. 

46.  Mortgages: — In  bonds  or  notes  secured  by  mortgage 
on  unencumbered  real  estate  in  the  county  where  the  bank  is 
located,  or  in  an  adjoining  county,  worth,  exclusive  of  improve- 
ments, at  least  double  the  amount  loaned  thereon,  but  not  to 
exceed  sixty  per  cent  of  the  whole  amount  of  deposits  shall 
be  so  loaned. 


INDIANA — ILLINOIS — SAVINGS    BANKS.  303 

47.  Notes,  Bills  and  Drafts: — In  promissory  notes,  bills 
of  exchange  before  maturity,  payable  at  some  chartered  bank  in 
this  state,  and  having  not  to  exceed  twelve  months  to  run,  made 
or  indorsed  by  two  or  more  freeholders  of  the  county  in  which 
such  bank  is  located,  or  of  the  adjoining  county,  but  no  such 
note  or  bill  shall  exceed  the  sum  of  five  thousand  dollars,  and  not 
more  than  five  thousand  dollars  shall  be  loaned  upon  the  same 
security.     In  dealing  in  exchange  by  purchasing  and  selling 
sight  or  time  drafts,  payable  out  of  the  state,  and  indorsed  by 
two  freeholders  as  above.     No  such  draft  shall  be  for  a  larger 
sum  than  five  thousand  dollars,  nor  shall  any  time  draft  pay- 
able out  of  the  state  have  more  than  sixty  days  to  run,  and  not 
more  than  one  draft  shall  be  held  by  any  such  bank  at  any  one 
time,  which  is  secured  by  the  same  indorsers,  or  by  any  of  the 
same  indorsers.    Loans  of  the  funds  of  such  bank,  while  wait- 
ing investment,  may  be  made  upon  the  security  of  the  stocks 
and  other  securities  above  mentioned,  to  an  amount  not  exceed- 
ing ninety  per  cent  of  the  cash  market  value  thereof. 

48.  Real  Estate: — In   a  banking   house  requisite  for  the 
transaction  of  its  business,  and  for  an  income  from  such  por- 
tion of  the  same  not  required  for  its  own  use,  the  cost  of  such 
building  not  to  exceed  five  per  cent  of  its  deposits;  and  in 
other  real  estate  acquired  under  mortgages  or  judicial  sales 
arising  out  of  claims  in  favor  of  such  bank. 

49.  Limitation: — No  loan  shall  be  made  upon  real  estate 
security,  or  bonds,  notes,  or  bills,  as  above  provided,  without  the 
consent  of  a  majority  of  the  trustees,  or  of  all  the  committee  of 
investment.     (Statutes  of  1888,  sees.  2721-2727.) 

ILLINOIS. 


50.  Savings  Banks: — The  legislature  of  this  state  passed 
an  act  in  1887  providing  for  the  organization  of  savings  societies 
or  institutions  for  savings,  which  included  a  list  of  municipal 
bonds  and  other  securities  in  which  the  funds  of  such  institu- 
tions should  be  invested;  but  the  Illinois  Supreme  Court  has 
decided  this  act  to  be  unconstitutional,  on  the  ground  that  its 


304  MICHIGAN — INVESTMENTS    BY    SAVINGS    BANKS. 

adoption  required  a  vote  of  the  people  under  the  provisions  of 
the  state  Constitution.  (Reedv.  People,  18  N.  E.  Rep.,  p.  295, 
decided  Sept.  2yth,  1888.)  The  act  may  be  found  on  page  77, 
Laws  of  1887. 


MICHIGAN. 


51.  Savings  Banks: — All  savings  banks  in  this  state  are 
required  to  keep  at  least  fifteen  per  cent  of  their  total  deposits 
on  hand,  in  approved  banks,  payable  on  demand;  or  invested 
in  United  States  bonds.     Two-thirds  of  the  remainder  of  such 
deposits  shall  be  invested  by  the  board  of  directors  in  bonds  of 
the  United  States,  of  this  state,  or  of  any  other  state,  which 
has  not  for  ten  years  previously  repudiated  its  debt  or  failed 
to    pay   the  principal    or   interest  thereof;    in  the  authorized 
public  debt  or  bonds  of  any  city,  county,  township,  village  or 
school  district  of  any  state,  provided  the  total  indebtedness  of 
such  municipality  does  not  exceed  five  per  cent  of  its  assessed 
valuation,   except  by  a  vote  of    two-thirds   of  the  board  of 
directors,  such  bonds  may  be  purchased,  if  the  total  liabilities 
do  not  exceed  ten  per   cent   of  such  assessed    valuation;    in 
loans  upon  negotiable  paper  secured  by  any  of  the  said  securi- 
ties; or  upon  bonds  or  notes  secured  by  mortgage  loans  upon 
unencumbered  real  estate  worth  at  least  double  the  amount 
loaned. 

52.  The  remainder  of  such  deposits  may  be  invested  in 
notes,  bills,  or  other  evidences  of  debt,  or  secured  collaterally 
upon  personal  property  of  known   marketable   value,    worth 
ten  per  cent  more  than  the  amount  loaned  and  the  interest  for 
the  time  loaned;  or  may  be  deposited  in  any  national  bank, 
trust  company,  or  bank  in  cities  in  this  or  any  other  state 
approved  by  the  commissioners  of  the  banking  department  as 
reserve  cities.      A  part  of  such  remainder  not  exceeding  the 
capital  and  additional  stockholders'  liability,  may  be  invested 
in  negotiable  paper  approved  by  the  board  of  directors,  but 
the  deposits  in  any  one  bank  shall  not  exceed  ten  per  cent  of 


WISCONSIN — INVESTMENTS    BY   SAVINGS    BANKS.          305 

the  total  deposits,  capital  and  surplus  of  the  depositing  bank. 
(Laws  of  1887,  chap.  205,  sec.  27,  adopted  by  popular  vote 
Nov.  6,  1888;  in  force  Jan.  i,  1889.) 


WISCONSIN. 


53.  Savings  Banks: — Savings  banks  organized  under  the 
laws  of  this  state  may  employ  not  exceeding  one-half  of  their 
deposits  in  making  loans  on  personal  security;  and  in  the  pur- 
chase of  the  public  stocks  and  bonds  of  the  United  States;  of 
the  states  of  Ohio,  Indiana,  Michigan,  Illinois,  Iowa,  Wiscon- 
sin and  Minnesota;  or  of  the  authorized  bonds  of  any  incor- 
porated city,  village,  town,  or  county  in  the  said  states.     All 
other  loans  shall  be  secured  by  mortgage  on  unencumbered  real 
estate  within  the  said  states. 

54.  Restrictions: — No  such  savings  bank  shall  invest  any 
part  of  its  deposits  in  the  stock  of  any  railroad  company,  nor 
loan  on,  or  invest  in,  any  mortgage  on  real  estate,  except  within 
the  states  named.      No  trustee,  director,  or  manager  of  any 
savings  bank  shall  borrow,  or  be  a  surety  for  a  borrower  of 
any  of  the  funds  thereof.     (Laws  of  1876,  chap.  384.) 


CHAPTER  XXIV. 


INVESTMENTS  BY  INSURANCE  COMPANIES. 


MAINE. 

i.  Insurance  Companies: — The  capital  and  other  assets 
of  stock  insurance  companies  in  this  state,  when  not  needed 
for  use,  shall  be  invested  in  the  funded  debt  or  bonds  of  the 
United  States,  or  any  of  the  New  England  states;  in  the  bonds 
or  securities  of  any  county,  town  or  other  municipal  corpora- 
tion of  said  New  England  states ;  in  the  purchase  of  real  estate 
in  fee;  in  loans  on  mortgages  on  real  estate,  or  deposits  in  sav- 
ings banks  in  said  states;  in  bonds  or  stocks  of  incorporated 
companies  in  said  states,  of  undoubted  character  for  credit, 
insurance  company  bonds  or  stocks  excepted;  but  in  no  case 
shall  any  such  funds  be  loaned  on  the  security  of  names  alone. 
(Statutes  of  1883,  chap.  49,  sec.  8.) 

MASSACHUSETTS. 


Insurance  Companies:  ' — Their  capital  shall    only    be 

invested: 

2.  Mortgages  and  Municipal  Obligations: — (i.)  In  first 
mortgages  on  real  estate  in  this  commonwealth.  (2.)  In  the 
public  funds  of  the  United  States,  of  any  of  the  New  Eng- 
land states,  of  New  York,  Pennsylvania,  Ohio,  Michigan, 
Indiana,  Illinois,  Wisconsin  and  Iowa,  and  of  the  District  of 
Columbia.  (3.)  In  the  bonds  or  notes  of  any  city,  county, 
town,  or  incorporated  district  of  this  commonwealth,  or  of  any 
city  of  any  other  of  the  New  England  states,  whose  net  indebt- 
edness does  not  exceed  five  per  cent  of  the  last  preceding  val- 

1  These  provisions  do  not  apply  to  life  and  casualty  insurance  com- 
panies organized  under  chap.  183,  Acts  of  1885. 

306 


MASSACHUSETTS — INVESTMENTS    BY    INS.    COMPANIES.    307 

uation  of  the  property  therein  for  purposes  of  taxation;  or  of 
any  county  or  town  of  Maine,  New  Hampshire,  Vermont, 
Rhode  Island  or  Connecticut,  whose  net  indebtedness  does  not 
exceed  three  per  cent  of  such  valuation  of  its  taxable  property. 
(4.)  In  the  legally  authorized  bonds  for  municipal  pur- 
poses of  any  city  of  more  than  thirty  thousand  inhabitants  in 
the  states  of  New  York,  Pennsylvania,  Ohio,  Michigan,  Indiana, 
Illinois,  Wisconsin  and  Iowa,  whose  net  indebtedness  at  the 
date  of  such  investment  does  not  exceed  five  per  cent  of  the 
valuation  of  its  property  for  assessment  of  taxes.  The  term 
1 '  net  indebtedness  ' '  to  exclude  any  debt  created  to  provide  a 
supply  of  water  for  general  domestic  use,  and  to  allow  credit 
for  the  sinking  funds  of  a  county,  city,  town  or  district,  avail- 
able for  the  payment  of  its  indebtedness. 

3.  Railroad  Bonds,  Notes  and  Stocks: — (5.)     In  the  first 
mortgage   bonds  of  any  railroad  company  incorporated  under 
the  authority  of  any  of  the  New  England  states,  and  whose 
road  is  located  wholly  or  in  part  in  the  same,  and  which  is  in 
possession  of  and  operating  its  own  road,  and  has  earned  and 
paid  regular  dividends  for  the  two  years  next  preceding  such 
investment;  in  the  first  mortgage  bonds,   guaranteed  by  any 
such  railroad  company,  of  any  railroad  so  incorporated  whose 
road  is  thus  located;  in  the  bonds,   stocks  or    notes   of  any 
railroad  company  incorporated  under  the  laws  of  this  common- 
wealth,  whose  road    is   located  wholly  or    in  part   therein, 
is  unencumbered  by  mortgage,   and  which  has  paid  a  divi- 
dend of  not  less  than  five  per  cent  per  annum  for  two  years 
next  preceding  such  investment;  or  in  bonds,  stocks  and  notes 
issued,  according  to  law,  of  either  the  Old  Colony  Railroad 
Company,  the  Fitchburgh  Railroad  Company,    or    the  Wor- 
cester,   Nashua    and    Rochester    Railroad    Company.      The 
term  railroad  companies  shall  not  be  construed  to  include  street 
railway  companies. 

4.  Bank  Stock: — (6.)     In  the  stock  of  any  bank  incor- 
porated under  the  authority  of  this  commonwealth,  or  of  any 


308    MASSACHUSETTS — INVESTMENTS    BY    INS.    COMPANIES. 

banking  association  located  in  the  New  England  states,   and 
incorporated  under  the  authority  of  the  United  States. 

5.  Personal  Loans: — In  loans  upon  the  note  or  notes  of 
any  citizen  of  this  commonwealth  secured  by  pledge  as  collat- 
eral of  any  of  the  above  named  securities.    Where  the  pledged 
securities  are  of  those  specified  in  the  first,   second,  third  or 
fourth  clauses,  as  above,  the  loan  thereon  may  be  of  an  amount 
not  more  than  their  par  value.     Where  the  pledged  securities 
are  of  those  specified  in  the  fifth  and  sixth  clauses  the  loan 
thereon   shall   not  exceed  their  par  value,  nor  be  more  than 
four-fifths  of  their  market  value. 

6.  Limitation: — No    insurance    company  shall   together 
own  or  hold  in  pledge  more  than  one-fourth  of  the  capital 
stock  of  any  bank,  nor  invest  in  or  lend  upon  the  stock  and 
bonds  together  of  any  railroad  company,  more  than  one-tenth 
of  its  own  capital;  nor  shall  its  entire  investment  in  and  loans 
upon  all  railroad  property  and  securities  exceed  one-third  of  its 
capital;  nor  shall  it  loan  more  than  sixty  per  cent  of  its  capital 
on  mortgages  of  real  estate,  nor  more  than  one-fifth  of  its  capi- 
tal on  one  mortgage.     No  officer  or  member  of  any  committet 
charged  with  investing  its  funds  shall  ever  borrow  from  or  be 
directly  or  indirectly  liable  on  any  loans  made  by  such  bank. 

7.  Real  Estate: — Only  such    real  estate  may  be  held  as 
convenient  for  the  accommodation  of  its  business,  and  costing 
not  exceeding  twenty -five  per  cent  of  its  cash  assets;  and  such 
real  estate  as  ma}-  be  acquired  under  any  mortgage  owned  by 
or  taken  upon  judgments  for  debts  due  such  company.     (Acts 
of  1887,  chap.  214,  sees.  25  and  34.) 

8.  Foreign    Insurance    Companies: — The   capital   of 
foreign  insurance  companies,  and  the  deposits  required  of  them 
to  be  made  with  the  state  department, may  be  in  the  same  class 
of  securities  as  provided  for  companies  organized  under  the 
laws  of  this  state.     (Id.,  sec.  79.) 


INVESTMENTS    BY    INSURANCE    COMPANIES.  309 

RHODE  ISLAND. 


g.  Insurance  Companies: — There  are  no  general  laws 
restricting  or  limiting  the  investments  of  insurance  companies 
organized  under  the  laws  of  this  state.  Foreign  insurance 
companies  are  required  to  have  a  capital  of  at  least  one  hun- 
dred thousand  dollars  invested  in  stocks  created  by  the  laws  of 
the  United  States,  or  of  the  state  in  which  any  such  company 
is  organized,  or  in  any  other  stocks  or  securities,  the  market 
value  of  which  shall  be  at  or  above  par.  Such  securities  to 
the  amount  named  must  be  deposited  with  the  proper  state  offi- 
cer of  the  state  in  which  the  company  is  organized,  and  a  cer- 
tificate to  that  effect  must  be  furnished  to  the  state  treasurer  of 
this  state.  (Statutes  1882,  chap.  157,  sec.  6.) 


CONNECTICUT. 


10.  Life  Insurance  Companies: — Bonds  and  Stocks — Re- 
strictions:— No  portion  of  the  capital,  assets  or  income  of  any  life 
insurance  company  incorporated  or  organized  under  the  laws  of 
this  state  shall  be  used  in  the  purchase  of  any  stocks  or  bonds  of 
any  mining  or  manufacturing  company  in  any  event;  or  in  the 
purchase  of  any  stocks  or  bonds  of  any  other  private  corporation, 
upon  which  last  mentioned  stocks  a  regular  dividend  shall  have 
been  passed,  or  upon  which  a  regular  interest  shall  have  been 
defaulted  at  any  time  within  three  years  prior  to  such  invest- 
ment, and  no  investments  shall  be  made  in  any  of  the  stocks 
or  bonds  last  above  referred  to,  which  have  not  been  issued  for 
the  space  of  three  years  prior  to  such  investment,  or  which 
have  not  a  market  value  equal  to  the  par  value  thereof,  unless 
the  written  approval  of  the  insurance  commissioner  as  to  such 
investments  shall  have  first  been  obtained. 

11.  Loans: — No  loans  shall  hereafter  be  made  of  the  capi- 
tal, or  funds  of  any  life  insurance  company  organized  under 
the  laws  of  this  state,  unless  secured  by  mortgage  on  unin- 
cumbered  real  estate  worth  at  least  double  the  amount  loaned 
thereon;  or  by  pledge  as  collateral,  of  stocks  or  b'onds  having 


3IO  INVESTMENTS    BY    INSURANCE    COMPANIES. 

a  market  value  of  at  least  twenty-five  per  cent  in  excess  of  the 
amount  loaned  thereon.  Provided,  however,  that  such  com- 
pany may  make  such  loan  upon  pledge  of  United  States  gov- 
ernment bonds,  and  bonds  of  the  state  of  Connecticut  at  par; 
but  no  loan  shall  be  made  upon  the  security  of  the  stock  of 
any  mining  company  or  of  the  stock  of  any  manufacturing 
company  unless  the  same  shall  be  accompanied  by  some  respon- 
sible individual  guarantee  or  by  other  collateral  securities  of 
equal  value  to  the  amount  loaned. 

12.  Restrictions: — No  loan  or  investment  shall  be  made 
by  any  such  company  without  the  unanimous  approval  of  its 
finance  or  executive  committee;  or  the  approval  of  the  majority 
of  directors  present  at  any  meeting  of  such  directors.  Offi- 
cers are  personally  liable  for  any  loss  sustained  by  an  invest- 
ment or  loan  made  in  violation  of  the  provisions  of  this  act. 
(Statutes  of  1888,  sees.  2885-2890.) 


NEW  YORK 


13.  Insurance  Companies  :' — Any  life,  fire  or  marine  in- 
surance company,  organized  under  any  of  the  laws  of  this  state, 
and  transacting  business  in  other  states,  or  foreign  countries, 
may  invest  the  funds  required  to  meet  its  obligations  incurred 
in  such  other  states  or  foreign  countries,  and  to  conform  to  the 
laws  thereof  respectively,  in  the  same  class  of  securities,  that 
such  corporations  are  allowed  to  invest  in  this  state;  but  such 
corporation  shall   not  loan   its  moneys  on  mortgages  on  real 
estate,  without   the   limits   of  this  state  and  states  adjacent 
thereto,  except  for  the  said  purposes.   (Laws  of  1886,  chap.  394.) 

14.  Life    Insurance   and   Trust    Companies  :  '2 — Any 
life  insurance  company,  or  any  trust  or  loan  company  may  by 
the    direction  and   consent   of  two-thirds   of  their  respective 
boards  of  directors,  managers,  or  proper  committees,  purchase 
or  invest  by    loan    or  otherwise  any    of  their  funds  in    the 
legally  issued  bonds  of  any  county,   town  or  village  of  this 

1  For  New  York  corporations  general!}",  see  \  6,  p.  323  herein. 

2  Also  for  New  York  trust  companies  see  ?  7,  p.  323  herein. 


NKW    YORK — INVESTMENTS   BY   INS.    COMPANIES.         311 

state,  anything  in  the  charter  of  such  company  to  the  contrary, 
notwithstanding.     (Laws  of  1868,  chap.  482.) 

15.  Life,    Health    and    Casualty    Insurance    Com- 
panies:— Investment  of  Capital  Stock: — The   capital   stock   of 
such  companies  shall  be  invested  in  stocks  or  treasury  notes  of 
the   United    States;  in  bonds  and  mortgages    on    improved, 
unincumbered  real  estate  within  this  state,  worth  seventy-five 
per  cent  more  than  the  amount  loaned  thereon,  exclusive  of 
farm  buildings;  or  in  such  stocks  or  securities  as  may  be  re- 
ceivable by  the  banking  department  of  this  state. 

16.  Investment  of  Surplus  Funds: — The  funds  and  accu- 
mulations of  such   companies   may   be   invested  in  bonds   or 
mortgages  on  improved  unincumbered  real  estate  within  this 
state,  or  outside  of  this  state  within  fifty  miles  of  New  York 
city,  worth  fifty  per  cent  more  than  the  amount  loaned  thereon; 
or  in  the  stocks  of  the  United  States,  of  this  state,  or  of  any 
incorporated  city  in  this  state,  if  at  or  above  par;  or  any  stocks 
created  under  the  laws  of  this  state  that  shall  be  at  or  above 
par  in  New  York  city.     Casualty  insurance  companies   may 
also  invest  any  of  their  funds,  except  the  amount  to  be  depos- 
ited with  the  insurance  department,  in  the  same  manner  as 
fire  insurance  companies.    (Statutes  of  1881,  pp.  1493-1494.) 

17.  Fire    and   Inland  Insurance   Companies: — Bonds 
and  Stocks: — The  capital  and  funds  of  any  such  companies 
organized  under  the  laws  of  this  state  may  be  invested  in  or 
loaned  on  the  stocks  or  treasury  notes  of  the  United  States; 
the  stocks  of  this  state;  or  the  stocks  or  bonds  of  any  county  or 
incorporated  city  in  this  state,  the  issue  of  which  is  authorized 
by  the  legislature.     The  surplus  above  the  capital  stock  may 
be  invested  in  or  loaned  on  the  stocks  or  bonds  of  any  one  of 
the  states;  or  the  stocks,  bonds  or  other  evidence  of  indebted- 
ness  of  any  solvent  dividend-paying  institution  incorporated 
under  the  laws  of  this  state,  or  of  the  United  States,  except 
their  own  stock.     The  surplus  over  the  capital  and  liabilities 
may  be  invested,  subject  of  the  approval  of  the  insurance  de- 
partment, in  the  stocks  or  bonds  of  any  foreign  country,  to  the 


312  INVESTMENTS    BY    INSURANCE    COMPANIES. 

extent  which  may  be  provided  under  the  laws  thereof,  as  the 
condition  of  such  company  doing  business  therein. 

18.  Real  Estate  Mortgages: — The   capital   and    surplus 
may  be  invested  in  or  loaned  on  bonds  and  mortgages  secured 
on  unincutnbered  improved  real  estate  within  this  state,  worth 
fifty  per  cent  more  than  the  amount  loaned  thereon,  exclusive 
of  buildings,  unless  such  buildings  are  insured  and  the  policy 
transferred  to  the  mortgagee.     In  addition,    any   amount   of 
such  surplus,  not  exceeding  one-half  of  the  annual  premium 
receipts  of  the  company   upon  its  outstanding  policies  in  any 
other  state,  may  be  invested  upon  bond  and  mortgage  security 
upon  real  estate  in  such  state,  which  shall  be  duly  certified  to 
be  unincumbered,  improved,  and  worth  double  the  sum  loaned. 
(Laws  of  1871,  chap.  608.) 

19.  Guarantee  Sicrplus  and  Special  Reserve  Funds: — The 
guarantee  surplus  fund  required  of  such  companies  under  the 
act  of  1878,  shall  be  invested  in  the  same  manner  as  capital  stock 
and  surplus  accumulations.     The  special  reserve  fund  required 
by  the  same  act  shall  be  invested  in  the  same  manner  as  capi- 
tal  stock,  but   any  amount   of   such    funds   in  excess   of  an 
amount  equal  to  one-half  of  its  capital  stock,  may  be  invested 
in  the  same  manner  as  surplus  accumulations.     (Laws  of  1878, 
chap.  282.) 

20.  Marine     Insurance     Companies: — Investment    of 
Capital  Stock: — The  capital  and   accumulated   funds   of  any 
marine  insurance  company,  organized  under  the  laws  of  this 
state,  may  be  invested  in  the  stocks  of  the  United  States,  or  of 
this  state;  in  the  stocks  or  bonds  of  any  incorporated  city  of 
this  state,  which  are  at  or  above  par  at  the  time  of  such  in- 
vestment; in  the  public  stocks  of  any  other  state;  in  bonds  and 
mortgages  on  unincumbered  real  estate  within  this  state,  worth 
fifty  per  cent  more  than  the  amount  loaned.     Such  funds  may 
also  be  loaned  on  any  of  the  said  securities  as  collateral. 

21.  Investment  of  Surphis: — In  addition  to  the  above,  the 
surplus  accumulations  above  the  capital  stock  may  be  invested 
in  or  loaned  upon   the   stocks,  bonds  or  other  evidence  of 


NEW    YORK — INSURANCE    COMPANIES — NEW  JERSEY.     313 

indebtedness  of  any  institution  incorporated  under  the  laws  of 
this  state,  except  their  own  stock,  provided  that  the  market 
value  of  such  securities  shall  be  worth  at  least  ten  per  cent 
more  than  the  amount  loaned.  Any  special  or  reserve  fund 
must  be  invested  in  the  same  manner  as  capital  stock,  except 
that  the  restrictions  as  to  securities  being  at  par  shall  not 
aPply-  (Statutes  1881,  p.  1462.) 

22.  Deposits   with    the  State     Insurance    Depart- 
ment: —  The  deposits  required  to  be  made   with   the   state 
insurance  department  by   insurance   companies  organized   or 
doing  business  in  this  state,  may  be  in  the  stocks  or  bonds  of 
the   United  States;    of  this  state;  or  of  any  incorporated  city 
of  this  state,  all  of  which  must  be  at  or  above  par;  or  in  bonds 
and  mortgages  on  unincumbered  improved  real  estate  within 
this  state,  worth  at  least  fifty  per  cent  more  than  the  amount 
loaned  thereon. 

23.  Foreign  Fire  Insurance  Companies: — Such  companies 
may  deposit  bonds  and  mortgages  as  above,  or  stocks  of  the 
United  States  or  of  this  state;  but  such  stocks  and  bonds  shall 
not  be  received   by   the   department  above   their  par  value. 
Such  foreign  corporation  may  also  deposit  such  stocks  or  secur- 
ities as  may  be  received  by  the  banking  department  of  this 
state  as  security  for  circulating  notes.     (Id.,  pp.   1449,  1480 
and  1503.) 


NEW  JERSEY. 


24.  Insurance  Companies  : — Insurance  companies  or- 
ganized under  the  laws  of  this  state  may  invest  their  capital 
or  accumulations  in  bonds  or  mortgages  on  unincumbered  real 
estate  within  this  state,  worth  double  the  amount  so  invested, 
in  the  stocks  or  bonds  of  this  state,  or  of  the  United  States,  or 
of  the  states  of  New  York,  Ohio,  Massachusetts  or  Pennsyl- 
vania; or  such  funds  and  accumulations  may  be  loaned  on  the 
security  of  any  such  stocks  or  bonds.  Any  company  organ- 
ized for  the  purpose  of  marine  insurance  may  also  loan  their 


314        NEW  JERSEY — INS.    COMPANIES — PENNSYLVANIA. 

funds  on  bottomry  and  respondentia.     (Statutes  of  1877,   p. 
511,  sec.  32.) 

25.  Fire  Insurance  Companies  : — Any  fire  insurance 
company  organized  under  the  laws  of  this  state,  and  doing 
business  out  of  this  state,  may  invest  a  part  of  its  surplus 
funds  in  bonds  and  mortgages  on  unincumbered  real  estate 
situated   where   it   may  be  doing   such   business,  and  worth 
double  the  amount   so   invested;  also  in  such  good  regular 
interest  paying  bonds  of  states  and  the  municipal  corporations 
thereof  as  have  not  within  ten  years  previously  defaulted  in 
the   payment   of  either    principal    or   interest   of  any   debt. 
(Laws  of  1883,  p.  83.) 

26.  Deposits  with    State    Comptroller  : — Insurance 
companies  organized  under  the  laws  of  this  state  are  required 
to  deposit  with  the  state  comptroller  twenty  thousand  dollars 
(or  such  additional  amount,  not  exceeding  one  hundred  thou- 
sand dollars,  as  may  berequired  by  such  comptroller)  in  stocks 
or  bonds  of  this  state  or  of  the  United  States,  or  of  the  states 
of  New  York,  Ohio,  Massachusetts  or  Pennsylvania,  or  of  the 
incorporated  cities  of  this  state,   bearing  at  least  six  per  cent 
interest,  or  in  mortgages  on  unincumbered  real  estate  within 
this  state  worth  double  the  amount  invested.      (Statutes  of 
*%77,  P-  5".   sec-  24-) 


PENNSYLVANIA. 


27.  Life    Insurance  Companies : — The  capital    of  a 
joint  stock  life  insurance  company  must  be  invested  in  bonds 
of  the  United   States,  or  of  this  state,  in  the  legally  issued 
bonds  of  any  city  or  county  of  this  state,  upon  which  there 
has  been  no  default  in  interest,  or  in  real  estate,  mortgages  or 
ground  rents  as  hereinafter  provided.     Such  companies  must 
at  all  times  maintain  such  investments  equal  to  the  entire  legal 
valuation  of  its  outstanding  policies  and  other  liabilities. 

28.  Fire   and   Marine   Insurance  Companies : — Fire 
and  fire  and  marine  companies  may,  in  addition  to  the  invest- 


PENNSYLVANIA — INVESTMENTS    BY    INS.    COMPANIES.    315 

raents  allowed  for  life  companies,  invest  their  capital  in  the 
bonds  of  any  state,  that  may  be  at  par  at  the  time  of  the  pur- 
chase; in  the  first  mortgage  bonds  of  solvent  railroad  cor- 
porations upon  which  no  default  in  interest  has  been  made; 
or  may  lend  the  same  on  the  pledge  of  any  of  said  securities. 

29.  Mortgages — Limitation: — All  mortgages  on  real  estate 
must  be  on  improved  and  unincumbered  property  within  this 
state,  worth  fifty  per  cent  more  than  the  sum  loaned  thereon,  ex- 
clusive of  buildings,  unless  such  buildings  are  insured  and  the 
policy  transferred  to  said  company.     Not  more  than  one-half  of 
the  capital  of  any  company  shall  be  -loaned  on  mortgages  of 
real  estate,  and  not  more  than  one-tenth  of  its  capital  shall  be 
invested  in  a  single  mortgage.     No  loan  shall  be  made  on 
personal   security.      The  directors   are   personally  liable   for 
losses  resulting  from  unauthorized  loans. 

30.  Real  Estate: — Companies  may  hold  only  such  real 
estate  as  may  be  requisite  for  the  convenient  transaction  of 
their  business,  such  fis  may  have  been  mortgaged  to  it,  con- 
veyed to  it  in  satisfaction  of  debts,  or  such  as  may  have  been 
purchased  under  foreclosure  in  collecting  previously  contracted 
debts.     All  real  estate  not  requisite  for  use  of  companies  shall 
be  sold  within  five  years  after  acquiring  title. 

31.  Investment  of  Surplus: — Any  money  over  and  above 
the  capital  stock  of  any  fire  or  fire  and  marine  insurance  com- 
panies, or  any  surplus  above  the  capital  and  other  liabilities  of 
a  life  insurance  company,  may  be  invested  in  the  securities 
above  enumerated,  or  in  the  stock  or  other  evidences  of  indebt- 
edness  of  any  solvent,    dividend-paying  corporation  created 
under  the  laws  of  this  state,  or  the  United  States,  or  loaned 
upon  the  pledge  of  the  same,  except  their  own  stock;  provided 
that  the  current  market  value  of  such  securities  shall  be  at 
least  twenty  per  cent  more  than  the  sum  loaned  thereon. 

32.  Mutual  Insurance  Companies  : — Mutual  compan- 
ies organized  under  the  laws  of  this  state  to  make  insurance 
upon  lives,  to  grant  and  purchase  annuities,  to  make  insur- 
ance   upon  the    health    of  individuals,    or  against   personal 


316  OHIO — INVESTMENTS    BY    INS.    COMPANIES. 

injury  or  accidents,  shall  have  fifty  per  cent  of  their  guar- 
anty capital  paid  in  and  invested,  less  necessary  expenses  of 
organization,  as  provided  for  other  life  insurance  companies. 
(Brightly 's  Purdon's  Digest,  p.  913.) 

33.  Note  : — A  large  majority  of  Pennsylvania  compan- 
ies were  organized  under  special  charters,  to  which  this  act  does 
apply.  The  constitution  of  1874  prohibits  the  creating  of 
corporations  by  special  laws  in  the  future,  but  does  not  annul 
those  in  force.  (Art.  3,  sec.  7.) 


OHIO. 

34.  Life  Insurance  Companies  : — Joint  stock  insurance 
companies  organized  under  the  laws  of  this  state  are  required 
to  have  a  paid  in  capital  of  at  least  one  hundred  thousand 
dollars,  which  must  be  invested   in  treasury  notes,  stocks  or 
bonds  of  the  United  States,  or  state  of  Qhio,  or  in  mortgages 
on  unincumbered  real  estate  within  the  state  of  Ohio,  worth 
double  the  amount  of  the  loan  thereon,  exclusive  of  buildings. 
Such  companies   ma)-   invest  their   accumulations   in   United 
States,  state,  county  or  city  bonds,  if  the  market  value  thereof 
is  at  least  eighty  per  cent  of  their  par   value;  in  bonds  and 
mortgages  upon  unincumbered  real  estate,   the  market  value 
of  which  is  at  least  double  the  amount  of  the  loan  thereon,  ex- 
clusive of  buildings;  in  loans  upon  the  pledge  of  such  bonds 
or  mortgages,  if  the  market  value  thereof  is  at  least  twenty- 
five  per  cent  more  than   the  amount  loaned  thereon;    or  on 
loans  upon  its  own  policies,  not  exceeding  the  reserve  or  pres- 
ent value  thereof.     (Statutes  of  1880,  sees.  3591  and  3593.) 

35.  Foreign  Life  Insurance  Companies  : — No  foreign 
insurance  company  is  allowed  to  transact  business  in  this  state- 
unless  at  least  one  hundred  thousand  dollars  of  its  assets  are 
invested  in  interest  bearing   bonds   or  stocks   of  the  United 
States,  or  of  some  state,  of  the  market  value  of  one  hundred 
thousand  dollars   in   the    city    of  New  York;  or  in  bonds  or 
mortgages  on  unincumbered  real  estate  in  this  state;  or  in  the 


OHIO — INVESTMENTS    BY    INS.    COMPANIES.  317 

state  under  the  laws  of  which  such  company  is  organized, 
worth  at  least  double  the  amount  loaned  thereon,  and  such 
bonds  or  mortgages  are  deposited  with  the  superintendent  of 
insurance  of  this  state,  or  the  proper  officer  of  the  state  under 
the  laws  of  whichsuch  company  isorganized.  (Id.,  sec.  3605.) 

36.  Insurance  Companies  Other  than  Life: — Invest- 
ment of  Capital: — The  capital   of  insurance  companies  other 
than  life  in  this  state  can  only  be  invested  in  United  States 
bonds;  Ohio  state  bonds;  bonds  of  a  county,  town  or  munici- 
pal corporation  in  this  state;  bonds  and  mortgages  on  unin- 
cumbered  real  estate  in  this  state  worth  fifty  per  cent  more  than 
the  amount  loaned  thereon,  exclusive  of  buildings;  the  stock 
of  any  national  bank  in  this  state;   or  first   mortgage  bonds 
of  railroads    in    this  state,   upon  which  no  default  has   been 
made  in  the  payment  of  interest  within  three  years  previously. 

37.  Investment  of  Other   Funds: — Other   funds  of  such 
companies  may  be  loaned  on  or  invested  in  the  above  named 
securities;    in    bonds'  and   mortgages   on   unincumbered   real 
estate  in  this  state,  worth  fifty  per  cent  more  than  the  amount 
loaned  thereon,  exclusive  of  buildings,  unless  such  buildings 
are  insured  in  some  authorized  company,  and  the  policy  trans- 
ferred to  the  investing  company;  bonds  of  any  state;  stocks, 
bonds  or  other  evidences  of  indebtedness  of  any  solvent  divi- 
dend paying  institution  incorporated  under  the  laws   of  this 
state,  or  of  the  United  States,  except  its  own  stock;  or  nego- 
tiable promissory  notes  running  not  more  than  six  months, 
secured  collaterally  by  any  of  the  above  described  securities, 
with  absolute  power  to  sell  within  twenty  days  after  default  in 
payment  at  maturity. 

38.  Limitation: — No  such  company  shall  own  more  than 
one-fourth  of  the  capital  stock  of  any  national  bank,  nor  invest 
in,  or  loan  on  the  stocks  and  bonds  of  any  railroad  company 
to   an   extent  exceeding  one- tenth  of  its  own  capital;  nor,  in 
the  aggregate,  in  or  on  all  railroad  property,  to  exceed  one- 
fourth  of  its  own  capital.     Not  more  than  one-half  of  its  cap- 
ital shall  be  loaned  on  mortgages  on  real  estate,  and  not  more 


3l8  ILLINOIS — INVESTMENTS    BY    INS.    COMPANIES. 

than  one-tenth  of  the  actual  capital  of  any  company  shall  be 
invested  in  a  single  mortgage.  The  current  market  value  of 
any  such  bonds,  stocks  or  other  evidences  of  indebtedness  in 
which  such  investment  of  funds  are  made,  shall  be  at  all  times 
during  the  continuance  of  such  loan,  at  least  twenty  per  cent 
more  than  the  amount  loaned  thereon.  (Statutes  of  1880, 
sees.  3637-3639-) 

ILLINOIS. 


39.  Fire,  Marine  and  Inland  Navigation  Insurance 
Companies: — Any  such  company  may  invest  its  capital  and 
accumulated  funds  in  bonds  and  mortgages  on  improved  unin- 
cumbered  real  estate  within  this  state,  worth  fifty  per  cent  more 
than  the  sum  loaned  thereon,  exclusive  of  buildings,  unless  the 
same  be  insured  and  the  policy  transferred  to  said  company ; 
in  the  stocks  of  this  state;  in  the  stocks  or  treasury  notes  of 
the  United  States;  in  the  stocks  of  national  banks;  in  the  stocks 
and  bonds  of  any  county  or  incorporated  city  in  this  state, 
authorized  to  be  issued  by  the  legislature;  or  such  capital  and 
funds  may  be  loaned  on  the  security  of  such  stocks,  bonds, 
treasury  notes  or  mortgages.     The  surplus  money  accumulated 
above  the  capital  stock  of  such  companies  may  also  be  loaned 
upon  the  pledge  of  the  stocks,  bonds,   or  other  evidences  of 
indebtedness  of  any  solvent  dividend  paying  institution  incor- 
porated under  the  laws  of  this  state,  or  of  the  United  States, 
except  their  own  stock,  provided  the  current  market  value  of 
such  securities  during  such  loans  be  at  least  ten  per  cent  more 
than  the  sum  loaned  thereon.      (Laws  of  1869,  p.  209,  sec.  8.) 

40.  Life  Insurance  Companies: — Such  companies  may 
invest  their  funds  in  the  stocks  of  the  United  States,  of  this 
state,    of  any  city  or  town  in  this  state,  or  of  any  national 
bank;  in  such  other  stocks  and  securities  as  may  be  approved 
by  the  state  auditor,  or  in  first  lien  mortgages  on  real  estate 
worth  at  least  twice  the  amount  loaned  thereon.     When  any 
such  company  shall  transact  business  in  any  other  state,  it  may 
invest  its  surplus  funds  in  such  state,  in  like  security,  and 


MICHIGAN — INVESTMENTS    BY    INS.    COMPANIES.  319 

under  the  same  restrictions  as  in  this  state.  Before  any  life 
insurance  company  can  go  into  operation  under  the  laws  of 
this  state,  a  guarantee  capital  of  at  least  one  hundred  thou- 
sand dollars  must  be  paid  in  and  invested  as  above  provided. 
This  requirement  also  applies  to  foreign  companies  doing  busi- 
ness in  this  state.  (Laws  of  1869,  p.  229,  sees,  i,  3,  n  and 
12.) 


MICHIGAN. 


41.  Life  Insurance  Companies: — Such  companies  are 
required  to  have  a  capital  stock  of  at  least  one  hundred  thou- 
sand dollars,  and  before  doing  business  they  must  deposit  with 
the  state  treasurer,   as  security  for  parties  insured  by  them, 
stocks  or  bonds  of  the  United  States,  of  this  state,  or  of  any 
city  or  county  in  this  state,   authorized  by  the  legislature, 
whose  indebtedness  does  not  exceed  five  per  cent  of  the  last 
assessed  valuation  thereof,  such  securities  to  be  taken  at  their 
par  value,  exclusive  of  interest.     First  mortgages  on  real  estate 
in  this  state  worth,  exclusive  of  buildings  at  least  double  the 
amount  loaned,  and  bearing  interest  at  not  less  than  five  per 
cent,  may  be  received  by  the  state  treasurer  on  account  of  such 
deposit.     (Laws  of  1887,  p.  33.) 

42.  Fire  Insurance  Companies: — Fire  Insurance  com- 
panies incorporated  under  the  laws  of  this  state  may  invest 
their  capital  and  funds  in  bonds  or  mortgages  on  unincumbered 
improved  real  estate  in  this  state  worth  double  the  sum  loaned 
thereon,    exclusive  of  buildings,    unless   such  buildings  are 
insured  and  the  policy  transferred  to  such  company;  in  the 
bonds  of  this  state;  in  the  bonds  or  treasury  notes  of  the  United 
States;  in  the  authorized  bonds  of  any  county,  municipality  or 
school  district  in  this  state;  or  they  may  loan  the  same  on  the 
security  of  such  bonds,  notes  or  mortgages.     (Statutes  of  1882, 
sec.  4275.) 


320  INVESTMENTS — BY    INSURANCE    COMPANIES. 

WISCONSIN. 


43.  Life  and  Accident  Insurance  Companies: — Any 

such  corporation,  organized  under  the  laws  of  this  state,  may 
invest  its  funds  and  accumulations  in  the  stocks  or  bonds  of  the 
United  States;  of  this  state;  or  of  any  county,  incorporated 
city  or  town  in  this  state;  or  in  first  lien  mortgages  on  real 
estate  worth  at  least  double  the  amount  loaned  thereon.  Such 
a  corporation  may  also  loan  to  its  policy-holders  sums  not 
exceeding  one-half  of  the  annual  premiums  on  their  policies, 
upon  notes  secured  thereby.  When  any  such  corporation  shall 
transact  business  in  any  other  state,  it  may  invest  its  surplus 
funds  in  such  state  on  like  securities  and  under  the  same 
restrictions  as  in  this  state.  (Statutes  of  1878,  sec.  1951,  as 
amended  by  Laws  of  1882,  chap.  204.) 

44.  Fire   or   Inland   Navigation   or   Transportation 
Companies: — Any  such  company  may  invest  its  capital  and 
accumulated  funds  in  bonds  and  mortgages  on  improved  unin- 
cumbered  real  estate  worth  at  least  fifty  per  cent  more  than 
the  sum  loaned  thereon,  exclusive  of  buildings,  except  such 
buildings  are  insured  and  the  policies  held  by  the  loaning  com- 
pany; in  the  authorized  stocks  of  the  United  States;  of  this  state; 
or  of  any  city,  county,  town  or  village  in  this  state;  or  loan 
the  same  on  the  security  thereof.     Any  surplus  above  the  cap- 
ital stock  may  be  invested  or  loaned  upon  the  pledge  of  such 
stocks  or  bonds  of  any  one  of  the  states;  or  in  the  stocks, 
bonds  or  other  evidences  of  indebtedness  of  any  solvent  divi- 
dend paying  corporation,  incorporated  under  the  laws  of  this 
state,  or  of  the  United  States,   except  their   own  stock,  pro- 
vided the  market  value  of  such  securities  during  the  existence 
of  such  loan,  shall  be  at  least  ten  per  cent  more  than  the 
sum  loaned  thereon.     (Id.,  sees.  1903-1911.) 


CHAPTER  XXV. 


INVESTMENT  OF  OTHER  TRUST  AND  CORPORATE  FUNDS  BY 
TRUST  COMPANIES,  GUARDIANS,  EXECUTORS,  ETC. 


NEW  HAMPSHIRE. 


i.  Guardians  : — Every  guardian  of  a  minor  after  July 
7th,  1866,  shall  invest,  in  the  name  of  his  ward,  or  in  his  own 
name  as  guardian,  any  money,  or  the  proceeds  of  any  real 
estate  or  personal  property  of  his  ward,  except  when  other- 
wise provided,  in  notes  secured  by  mortgages  on  real  estate  of  at 
least  double  the  value  of  the  notes;  in  some  incorporated  sav- 
ings bank  in  this  state;  in  the  bonds  or  loans  of  this  state;  or 
of  some  town,  city  or  county  of  this  state,  or  of  the  United 
States,  and  in  no  other  way  whatever.  (Statutes  of  1878, 
chap.  185.) 


VERMONT. ' 


2.  Trust  Estates : — The  probate  court  has  jurisdiction 
of  all  trust  estates,  and  after  notice  to  interested  parties  may 
authorize  or  require  the  trustee  to  sell  all  or  any  part  of  such 
estate,  and  invest  the  proceeds,  with  any  other  moneys  in  the 
trustees'  hands,  in  real  estate,  or  in  any  other  manner  as  the 
court  judges  most  beneficial,  and  may  make  any  orders  as  to 
managing,  selling,  or  investing  the  same,  not  inconsistent  with 
the  terms  of  the  trust.  (Statutes  1880,  chap.  119.) 

MASSACHUSETTS. 


3.     Mortgage,   Loan  and  Investment  Companies  :— 

Any  such  company  organized  under  the  laws  of  this  state  is 

1  For  investments  by  Trust  companies  in  this  state,  see  pp.  288-291, 
undersavings  Banks. 

(321) 


322         INVESTMENTS    BY   GUARDIANS,    EXECUTORS,   ETC. 

required  to  accumulate  a  guarantee  fund  of  not  less  than 
twenty-five  per  cent  of  its  paid  capital.  This  fund  may  be 
invested  in  United  States  bonds;  English  consols;  first  mort- 
gage bonds  of  any  railroad  corporation  which  has  paid  a  divi- 
dend on  its  stock  for  at  least  three  years  previously;  in  the 
legally  authorized  bonds  for  municipal  purposes  of  any  city  of 
the  United  States  of  not  less  than  thirty  thousand  inhabitants, 
whose  whole  indebtedness  shall  not  exceed  five  per  cent  of  its 
last  assessed  valuation;  or  in  any  securities  in  which  savings 
banks  in  this  state  are  allowed  to  invest.  (Laws  of  1888, 
chap.  387,  sec.  12.) 


RHODE   ISLAND. 


4.  Guardians:  — Any  guardian  may  invest  any  money 
in  his  hands,  not  otherwise  required,  in  notes  secured  by  mort- 
gage upon  real  estate  in  this  state;  in  the  bonds  of  the  United 
States,  or  of  this  state;  in  the  bonds  or  notes  of  any  city  or 
town  in  this  state;  or  he  may  deposit  the  same  in  any  savings 
bank  or  trust  company  in  this  state,  as  he  shall  deem  for  the 
best  interests  of  his  ward.  He  may  also,  under  the  direction 
of  probate,  invest  such  money  in  real  estate  or  bank  stock  in 
this  state.  (Statutes  of  1882,  chap.  169,  sec.  38.) 


CONNECTICUT. 


5.  Executors,  Trustees,  Guardians  and  Conserva- 
tors : — Testamentary  and  other  trustees  acting  under  the  pro- 
bate court,  unless  otherwise  provided,  may  loan  their  trust 
funds  on  the  security  of  mortgages  on  unincumbered  real  estate 
in  this  state,  double  in  value  the  amount  loaned;  or  such  funds 
may  be  invested  in  such  mortgages;  or  in  the  bonds  of  this  state, 
or  of  any  town,  city  or  borough  thereof;  or  in  any  bonds, 
stocks  or  other  securities,  which  the  savings  banks  in  this  state 
may  be  authorized  to  invest  in;  or  they  may  be  deposited  in 
such  savings  banks.  Trust  funds  received  by  executors,  trus- 
tees, guardians  or  conservators  may  be  kept  invested  in  the 


INVESTMENT    OF   CORPORATE    AND   TRUST    FUNDS.         323 

securities  received  by  them,  unless  otherwise  ordered  by  the 
probate  court,  or  the  instrument  creating  the  trust.  (Statutes 
1888,  sees.  495-496.) 


NEW  YORK. 


6.  Investments   by  Corporations  : — Any  corporation, 
except  savings  banks,  organized  under  the  laws  of  New  York, 
and   transacting   business   in   it   and   other  states  or  foreign 
countries,  may  hold  such  real  estate  as  shall  be  requisite  for  the 
convenient  transaction  of  its  business,  and  invest  its  funds  in 
the  stocks,  bonds  and  securities  of  other  corporations  owning 
lands  situated  in  this  state  or  such  states;  provided  that  loans 
shall  not  be  made  on  any  stocks  upon  which  dividends  shall 
not  have  been  declared  continuously  for  three  years  previously ; 
and  provided  such  stock  shall  be  continuously  of  a  market 
value  of  twenty  per  cent  greater  than  the  amount  loaned  or 
continued  thereon.     (Laws  of  1883,  chap.  361.) 

7.  Trust  Companies:   '—The  capital  of  any  trust  com- 
pany organized  under  the  laws  of  this  state  shall  be  invested 
in  bonds  and  mortgages  on  unincumbered  real  estate  in  this 
state,  worth  at  least  double  the  amount  loaned  thereon;  in  the 
stocks  of  the  United  States,  or  of  this  state;  or  in  the  authorized 
stocks  or  bonds  of  any  incorporated  city  or  county  in  this  state. 
The  trustees  of  any  such  company  may  invest  trust  moneys 
received  by  them  in  the  public  stocks  of  the  United  States,  or 
of  any  state;  or  in  the  authorized  bonds  or  stocks  of  any  incor- 
porated city  or  county  of  this  state;  or  in  such  real  or  personal 
security  as  they  may  deem  proper.     No  trust  company  shall 
hold   stock   in    any    private    incorporated    company   beyond 
twenty  thousand  dollars.     No  loans  shall  be  made  directly  or 
indirectly  to  any  trustee  or  officer  of  such  company.     These 
provisions    relating   to    trust  companies,    include    all    trust, 
loan,  mortgage,  security  guarantee  and  indemnity  companies  or 
associations  which  receive  money  on  deposit,  except  banks. 
(Laws  of  1887,  chap.  546,  sees.  2027-2028.) 

1  Also  see  \  14,  p.  310  herein. 


324   INVESTMENT  OF  CORPORATE  AND  TRUST  FUNDS. 

8.  Credit  Guarantee  and  Indemnity   Companies  : — 
Such  companies  may  invest  their  capital  stock  and  funds  in 
bonds  and  mortgages  on  unincumbered  real  estate,  within  this 
state,  worth  fifty  per  cent  more  than  the  amount  loaned,  exclu- 
sive of  farm  buildings;  in  the  stocks  of  the  United  States,  or  of 
this  state;  in  the  stocks  or  bonds  of  any  incorporated  city  in 
this  state,  which  shall  be  above    par.     Loans  may  be  made 
on  the  security  of  such  stocks,  bonds  or  mortgages.     (Laws 
of  1886,  chap,   in,  sec.  7.) 

9.  Title  and  Bond  and  Mortgage   Guarantee  Com- 
panies : — Such  companies  may  invest  their  capital  and  funds 
in  mortgages  on  unincumbered  improved  real  estate  in  this 
state,  of  double  the  value  of  the  loan,  exclusive  of  buildings, 
unless  the  same  are  fully  insured;  in  the  stocks  of  this  state;  in 
the  stocks  or  treasury  notes  of  the  United  States;  or   in  the 
authorized  stocks  or  bonds  of  any  county  or  incorporated  city 
in  this   state;  or  such  funds  may  be  loaned  on  any  of  said 
securities.     The  surplus  above  the  capital  stock  may  be  in- 
vested in  or  loaned  upon  the  public  stocks  or  bonds  of  the 
United  States,  or  of  any  state,  provided  the  market  value  thereof 
shall  be  at  least  ten  per  cent  more  than  the  amount  loaned 
thereon.     (Laws  of  1885,  chap.  538.) 

10.  Banks  : — It  is  lawful  for  any  bank  or  banking  asso- 
ciation incorporated  under  the  laws  of  this  state,  or  for  any 
individual   banker,  to   purchase  any  of  the  stocks,  bonds  or 
interest   bearing  obligations  of  the  United  States,  or  of  any 
city,  county,  town  or  village  in   this  state.     (Laws  of  1882, 
chap.  409,  sec.  37.) 

NEW  JERSEY. 


ii.  Guardians,  Executors,  Etc.: — Any  executor,  admin- 
istrator, guardian  or  trustee,  whose  duty  it  may  be  to  loan  the 
money  intrusted  to  him,  unless  otherwise  directed  by  the  will, 
terms  of  the  trust,  or  the  court  having  the  jurisdiction  thereof, 
may  invest  the  same  in  bonds  secured  by  first  mortgage  upon 
real  estate  estimated  to  be  worth  at  least  twice  the  amount 


INVESTMENTS    BY    GUARDIANS,  EXECUTORS,    ETC.         325 

loaned,  at   a  rate  of  interest  not  less  than  five  per  cent  nor 
greater  than  six  per  cent  per  annum.     (Laws  1881,  p.  130.) 

12.  Deposits  to  Secure  Bank  Circulation: — Deposits 
by  banks  organized  under  the  laws  of  this  state  to  secure  their 
circulation,  may  be  made  in  the  public  stocks  (equal  to  a  stock 
producing  not  less  than  four  per  cent)  of  this  state,  of  the 
United  States,  or  of  the  states  of  Massachusetts,  New  York 
Pennsylvania  or  Ohio.  One-third  of  such  deposits  may  be  in 
real  estate  mortgages  of  the  kind  and  quality  provided  by  law. 
(Statutes  of  1877,  pp.  62-63,  as  amended  by  chap.  10,  Laws  of 
1884.) 


PENNSYLVANIA. 


13.  Guardians,  Executors,  Etc.: — Executors,  adminis- 
trators, guardians  and  trustees,  under  an  order  from  the  proper 
court,  may  invest  the  trust  funds  in  their  hands  in  the  stock  or 
public  debt  of  this  commonwealth,  or  of  the  city  of  Philadel- 
phia; in   the  bonds  or  certificates  of    debt  created  or  issued 
according  to  law  by  any  of  the  counties,  cities,  school  districts 
or  municipal  corporations  of  this  commonwealth.     (Brightly's 
Purdon's  Digest  1883,  P-  527-) 

14.  Constitutional  Limitation: — No    act   of   the   general 
assembly  shall  authorize  the  investment  of  trust    funds  by 
executors,  administrators,  guardians  or  other  trustees  in  the 
bonds  or  stock  of  any  private  corporation.     (Const.   1874,  art. 
3,  sec.  22.) 


OHIO. 


15.  Guardians: — It  is  made  the  duty  of  guardians  in 
this  state  to  invest  the  money  of  their  wards,  within  a  reason- 
able time  after  the  same  is  received,  in  notes  or  bonds  secured 
by  first  mortgages  on  real  estate,  of  at  least  double  the  value  of 
the  amount  loaned  or  invested,  exclusive  of  improvements, 
timber  or  minerals  subject  to  destruction  or  exhaustion;  in 
bonds  of  the  United  States,  or  of  any  state,  on  which  default 


326        OHIO  — INVESTMENT   OF    TRUST    FUNDS — ILLINOIS. 

has  never  been  made  in  the  payment  of  interest;  or  in  the 
legally  issued  bonds  of  any  county  or  city  in  this  state;  or,  with 
the  approval  of  the  probate  court,  in  productive  real  estate  in 
this  state,  the  title  to  be  taken  in  the  name  of  the  guardian,  as 
such.  If  any  such  guardian  fail  to  loan  or  invest  the  money 
of  his  ward  within  such  reasonable  time,  he  shall  account  for 
such  money,  with  interest  thereon.  (Statutes  of  1886,  sec. 
2669.) 

16.  Safe  Deposit  and  Trust  Companies: — All  moneys 
or  properties  received  in  trust  by  such  companies,  unless  by 
the    terms   of  the   trust   some   other   of    investment    is   pre- 
scribed, together  with  the  capital  of  such  company,  shall  be 
loaned  on  or  invested  only  in  the  authorized  loans  of  the  United 
States;    of   this  state;  of   cities,    counties    or    towns  of    this 
state;  in  the  stocks  or  bonds  of  any  state  in  the  Union  that  has 
for  five  years  previously  regularly  paid  the  interest  on  its  legal 
bonded  debt;  or  of  the  cities,  counties  or  towns  of  such  states 
which  shall  have  so  paid  the  interest  on  their  legal  bonded  debt; 
stocks  of  national  banks  organized  within  this  state;   "the  first 
mortgage  bonds  of  any  railroad  company  within  the  states  above 
named,"  which  has  earned  and  paid  regular  dividends  on  its 
stock  for  five  years  previously:  or  first  mortgages  on  real  estate  in 
this  state;  or  loaned  to  individuals,  with  a  sufficient  pledge  of 
any  of  the  aforesaid  securities,  or  to  this  state,  or  any  county, 
city  or  town  therein. 

17.  Limitation: — No  loan  shall  ever  be  made,  directly  or 
indirectly  to  any  officer,  employe  or  trustee  of  such  company, 
and  not  more  than  ten  per  cent  of  its  capital  shall  be  invested 
in  any  one  security  or  loan,  except  for  a  building  and  vaults. 
(Laws  of  1882,  pp.  101-102.) 

ILLINOIS. 


18.  Guardians: — Every  guardian  in  this  state  is  required 
to  put  and  keep  his  ward's  money  at  interest  upon  security 
to  be  approved  by  the  court,  or  by  investing  the  same,  on 
approval  of  the  court,  in  United  States  bonds,  or  in  the  bonds  of 


IU.1NOIS — INVESTMENT  OF  TRUST  FUNDS — WISCONSIN.     327 

any  county  or  city,  not  issued  in  aid  of  railroads,  and  the  in- 
debtedness of  which  by  law  is  not  allowed  to  exceed  five  per 
cent  of  the  assessed  valuation  thereof.  Personal  security  may 
be  taken  for  loans  not  exceeding  one  hundred  dollars.  Loans 
upon  real  estate  shall  be  secured  by  first  mortgage  thereon,  not 
to  exceed  one  half  the  value  thereof.  No  mortgage  loans  shall 
be  made  for  longer  than  three  years,  nor  be3/ond  the  minority 
of  the  ward,  but  such  mortgages  may  be  extended  from  year  to 
year  without  the  approval  of  the  court.  The  guardian  is 
chargeable  with  interest  upon  any  money  which  he  shall 
wrongfully  or  negligently  allow  to  remain  in  his  hands  unin- 
vested. (Laws  of  1887,  p.  193.) 

19.  Trust  Companies: — Under  the  provisions  of  the 
Act  of  1887  authorizing  certain  corporations  to  accept  and  exe- 
cute trusts,  as  receivers,  assignees,  executors  and  trustees,  such 
trust  company  is  required  to  deposit  with  the  state  auditor  the 
sum  of  two  hundred  thousand  dollars  in  registered  stocks  of 
the  United  States,  or  of  this  state ;  or  in  first  lien  mortgages  on 
improved,  productive  real  estate  in  this  state,  worth  at  least 
twice  the  amount  loaned  thereon.  (Id.,  p.  144.) 


WISCONSIN. 


20.  Trust  Companies : — Trust  companies  organized  under 
the  laws  of  this  state  are  required  to  have  a  paid  in  capital 
stock  of  at  least  one  hundred  thousand  dollars,  which  shall  be 
invested  in  bonds  and  mortgages  on  unincumbered  real  estate 
within  this  state,  worth  double  the  amount  loaned  thereon;  in 
the  bonds  of  the  United  States  or  of  this  state;  or  in  the  author- 
ized bonds  of  incorporated  cities  of  this  state.  (Laws  of  1883, 
chap.  294.) 


SUGGESTIONS    TO    MUNICIPALITIES    ISSUING 

BONDS. 


Authority — Meetings — Elections: — The  first  thing  neces- 
sary is  to  ascertain  that  the  authority  or  power  to  issue  bonds 
exists. 2  All  the  proceedings  or  conditions  of  the  act  or  law 
under  which  the  issue  is  made  should  be  followed  in  detail 
with  substantial  strictness.  Any  action  required  to  be  taken, 
or  proceedings  had  by  any  county  board,  city  council,  or  other 
municipal  body,  should  be  had  or  taken  at  regular  or  legally 
convened  meetings,  at  which  a  legal  quorum  is  present.  The 
record  should  show  all  these  facts,  and  also  that  the  proceed- 
ings were  approved,  or  the  question  adopted  by  the  proper 
number  or  majority  voting  therefor.  When  an  election  is 
required,  it  must  be  called  by  a  legal  notice  being  given,  and 
held  at  the  time,  during  the  hours,  and  in  the  manner  provided 
by  law. 

Record — Issue  of  Bonds: — A  complete  record  should  be 
kept  by  the  proper  officer  of  all  required  proceedings  relating 
to  the  issue  of  the  bonds,  including  copies  of  all  calls  for  meet- 
ings, election  notices,  etc.,  with  the  proof  of  service,  posting 
or  publication,  as  the  case  ma}'  require.  If  the  law  provides  a 
form  for  the  bonds,  that  form  should  be  followed,  otherwise 
any  appropriate  form  may  be  used.  It  is  well  to  have  the 
bonds  contain  some  recital  of  the  performance  of  the  required 
facts  necessary  to  a  valid  issue.  A  general  recital  that  they 
are  issued  under  and  in  accordance,  and  in  all  respects  in  strict 
conformity  with,  the  laws  of  the  state  in  which  they  are  issued, 
as  we  have  seen,  protects  the  holder  against  irregularities,  and 
will  frequently  aid  in  negotiating  the  bonds.  If  the  issuing 
municipality  has  a  corporate  seal,  it  should  always  be  attached. 3 

1  See  chap.  5  herein  on  The  Issue  of  Municipal  Bonds,  pp.  43-52. 

2  See  chap.  2  herein  on  Power  to  Issue  Bonds,  pp.  5-18. 

3  As  to  the  Form  and  Execution  of  Municipal  Bonds,  see  pp.  45-50; 
aud  as  to  recitals  and  their  legal  effect,  see  pp.  53-57. 

(328) 


SUGGESTIONS    AS    TO    ISSUE    OF   BONDS.  329 

Statement  for  Purchasers: — In  offering  bonds  for  sale,  that 
purchasers  may  act  intelligently,  it  is  well  to  furnish  a  general 
statement  showing  the  purpose  for  which  the  bonds  are  issued, 
amount,  denomination,  when  to  be  dated,  rate  of  interest, 
when,  where  and  how  payable;  when,  and  how  to  be  sold; 
under  what  law  the  issue  is  made;  the  name  and  character  of 
the  municipality  or  corporation  making  the  issue;  the  assessed 
valuation  of  the  taxable  property  thereof;  its  population,  and 
total  indebtedness,  bonded  or  otherwise;  together  with  any 
other  facts  affecting  the  obligations  offered. ' 

Transcript  and  Proofs  for  Examination: — Where  the  pur- 
chaser requires  for  a  legal  examination,  papers  showing  the 
validity  of  the  issue,  the  municipality  should  furnish  a  duly 
certified  transcript  of  so  much  of  their  record  as  will  show 
affirmatively  the  performance  of  all  facts  and  conditions  neces- 
sary to  the  legal  issue  of  the  bonds,  with  copies  of  election 
notices,  proof  of  publication,  etc.,  in  detail,  substantially  as 
we  have  indicated  as  to  the  record  to  be  kept.  If  the  bonds 
are  issued  under  a  special  act,  a  copy,  or  so  much  thereof  as 
relates  to  the  issue  of  the  bonds,  should  accompany  the  papers. 
This  is  not  so  important  where  the  bonds  are  issued  under  a 
general  law,  as  the  general  statutes  are  usually  more  accessible 
to  the  examiner;  but,  even  in  such  cases,  where  practicable, 
and  especially  where  the  law  is  a  recent  one,  or  subsequent  to 
the  general  statutes,  it  frequently  expedites  the  work  of 
examination  to  furnish  such  a  copy.  If  the  municipality  is 
organized  or  acting  under  a  special  charter,  a  certified  copy  of 
the  same  or  so  much  thereof  as  relates  to  or  affects  the  issue  of 
the  bonds,  or  any  proceedings  connected  therewith,  should  be 
furnished.  If  there  is  a  constitutional  or  statutory  provision 
limiting  the  amount  of  indebtedness  which  the  municipality 
may  incur,  or  of  bonds  which  may  be  issued,  to  a  certain  per 
cent  of  the  taxable  property  therein,  a  certificate  should  be 
furnished  from  the  county  clerk  or  other  officer  having  the 

1  Appropriate  printed  blanks  for  such  statements  will  be  furnished 
on  application  to  S.  A.  Kean  &  Co.,  at  Chicago  or  New  York. 


33°  SUGGESTIONS    AS   TO   ISSUE   OF    BONDS. 

legal  charge  of  the  assessment  records,  showing  the  amount 
of  such  taxable  property.  In  all  cases  certificates  and  other 
proofs  should  be  made  by  the  officer  having  the  legal  custody 
of  the  records  or  proofs  concerning  which  he  certifies.  It  is 
also  well,  especially  in  the  case  of  school  districts  and  other 
similar  municipal  corporations,  to  have  the  bonds  accompanied 
with  proofs  as  to  the  identity  of  the  officers  acting  or  executing 
the  bonds. 


AMENDMENTS  (pages  288  and  289). 

Vermont  Savings  Bank  : — Since  the  text  was  prepared, 
the  following  amendments  have  been  made  :  In  section  9,  last 
line  of  page  288,  insert  "  New  York  and  Ohio  "  after  "  New 
England  States. ' '  Beginning  with  the  next  sentence  on  page 
289,  the  section  as  amended  should  read  "In  the  municipal 
bonds,  not  issued  in  aid  of  railroads,  of  the  cities  and  counties 
of  10,000  or  more  inhabitants  in  Illinois,  Indiana,  Iowa,  Min- 
nesota, Missouri,  New  Jersey,  Pennsylvania,  Wisconsin,  and  of 
the  cities,  counties  and  towns  of  5,000  or  more,  lying  south  of 
the  44th  parallel,  in  Michigan  and  in  the  school  bonds  and 
independent  school  district  bonds  of  the  same  states,  provided 
the  indebtedness  of  such  city,  county,  town  or  school  district 
(except  cities  of  75,000  or  more)  does  not  exceed  five  per  cent 
of  the  assessed  valuation  thereof ;  in  the  bonds  (other  than 
railroad  and)  of  cities  of  5,000  or  more  in  the  same  states, 
where  the  municipal  indebtedness  of  such  city  is  not  allowed 
by  law  to,  and  does  not  exceed  five  per  cent  of  its  valuation. 
In  such  bonds  of  counties 'and  cities  of  15,000  or  more  in 
Nebraska  and  Kansas,  the  indebtedness  of  which  does  not 
exceed  five  per  cent  of  its  assessed  valuation  ;  or  in  the  public 
funds  of  any  of  the  states  above  named."  Section  n  on 
page  289  as  amended,  should  read  "Such  funds  may  be 
invested  in  the  stock  of  any  national  bank  in  the  New  Eng- 
land States  and  New  York,  or  of  any  banking  association,  or 
trust  company  located  in  and  incorporated  under  the  authority 
of  this  state."  (Above  amendments  approved  Nov.  28,  1888.) 


GENERAL  INDEX. 

(References  are  to  pages,  unless  otherwise  indicated.) 


ARIZONA, — County  board — bonds  for  public  buildings 270 

County  funding  bonds 271 

Federal  limitations  on  municipal  indebtedness,  etc 264-265 

Laws  of,  must  be  submitted  to  Congress 265 

Territorial  funding  bonds 269 

ARKANSAS — cities,  classification  of 224 

City  and  town  funding  bonds 225 

Constitutional  limitations,  and  provisions 222-223 

County  court,  county  affairs,  managed  by 223 

County  funding  and  compromise  bonds 223-224 

Municipal  and  state  bonds,  limited  to  funding  existing  debts  .  .  222 

Special  acts  prohibited,  except  for  certain  purposes 222 

Tax  for  municipal  and  state  purposes  limited 223 

Auditor  of  state,  registration  of  bonds  by 50-51 

i>ona  fide  holder  defined,  rights  of 3,  56-57 

Bonds  (see  municipal  bonds). 

CALIFORNIA — Cities,    classification   of 241 

City  indebtedness,  how  authorized  and  incurred 241 

City  funding  and  sewer  bonds 242 

Constitutional  limitations  and  provisions 239 

County  board  of  supervisors 240 

County  bonds,  how  issued 240 

County  indebtedness,  limitation  on 239-240 

Funding  bonds  by  counties  and  their  subdivisions 244 

School  bonds,  how  authorized  and  issued 243 

Water-works,  bonds  for,  in  cities  of  first  class 243 

Charter  limitations  on  municipal  indebtedness 36-37 

COLORADO — City  and  town  bonds 236 

City  and  town  funding  and  refunding  bonds 236-237 

Constitutional  limitations  and  provisions 232-234 

County  bonds  for  public  buildings,  bridges,  roads,  etc 234 

County  commissioners 234 

331 


332  GENERAL   IXDEX. 

County  funding  and  refunding  bonds 234-236 

Limitation  on  loans  by  counties,  cities,  and  school  districts,  232-233 

School  district  bonds,  for  what  and  how  issued 237-238 

Collection  of  municipal  bonds  by  legal  proceedings 58 

Conditions  preceding    issue  of  bonds 43 

CONNECTICUT — Executors,    guardians,    trustees,    etc.,    invest- 
ments by 322 

Life  insurance  companies,  investments  by 309 

Savings  banks,  investments  by 295-297 

Constitutional  limitations  on  the  issue  of  bonds 28-42 

Constitutional  limitations  on  municipal  indebtedness 28-37 

Constitutional  limitations,  indebtedness  in  excess  of,  void  ....    29-37 

Corporations,  municipal  or  public,  powers  of 5-6 

County  warrants,  certificates,  orders,  etc 15 

County  board,  less  than  full  number  may  execute  bonds 49 

Curative  acts  to  validate  irregular  bond  issue 52 

.DAKOTA — Calling  bonds  for  payment - 263 

City  loans  and  bonds 250,  262 

City  school  bonds 259-261 

City  funding  bonds 251 

City  internal  improvement  bonds 251,  262 

City  sewerage  bonds 251,  262 

County  commissioners,  organization  and  meetings 247 

County  board  required  to  submit  extraordinary  outlays  to  vote  .  247 

County  funding  bonds 248-249 

District  school  bonds 258 

Limitation  on  territorial  and  municipal  indebtedness 264 

Municipal  bonds  for  bridges,  water-works,  fire  apparatus,  etc.  .  262 

School  bonds,  for  what,  and  how  issued 254-262 

School  funding  and  refunding  bonds 260-261 

Special  legislation,  federal  limitation  on 265 

Submission  of  questions  to  vote  of  county,  how  made  .  .  .  247-248 

Town  bonds,  how  authorized  and  issued 252-253 

Township  debts,  must  be  authorized 252 

Township  drainage  bonds 253 

Township  school  bonds 256-258 

Water-works,  etc.,  bonds  for 262 

Decisions  of  highest  state  courts  usually  control 58-59 

Jtimforcement  of  the  payment  of  bonds 58 

Execution  of  municipal  bonds 45 

Execution  by  less  than  a  full  board 49 

Equitable  estoppel,  as  a  protection  to  bondholders 53~57 


GENERAL   INDEX.  333 

_T  onu  of  municipal  bonds 45-46 

ijrrist  mills,  bonds  in  aid  of,  in  Kansas  valid 24 

Grist  mills,  steam,  bonds  in  aid  of,  in  Nebraska  invalid 24 

Guardians,  executors,  trustees,  etc.,  investments  by 321-327 

ADAHO— County  government — county  funding  bonds  ....    281-282 

Federal  limitations  on  municipal  indebtedness,  etc 264-265 

School  bonds,  for  what  and  how  issued 283 

Town  and  village  government — loans — bonds 283 

ILLINOIS  —  Auditor  to  register  funding  and  drainage  bonds  .    101,   108 

Bridges,  county  and  town  bonds  for 104 

Constitutional  limitations  and  provisions 9i~92 

County  board  of  commissioners 92 

County  bonds 93,  98,  102,  104 

City  and  village  bonds 94,  95,  98,  102 

City  bonds,  record  of  to  be  kept 95 

City  and  village  refunding  bonds 94,  98,  102 

Drainage  bonds 105  108 

Funding  bonds,  provisions  of  general  act 98-102 

Funding  bonds,  act  of  1872 102-103 

Guardians,  ward's  money  how  invested 326-327 

Improvement  districts  in  cities  and  villages — bonds 95-96 

Insurance  companies,  investments   by 318 

Limitation  on  municipal  indebtedness,  etc 9I-93 

Park  bond  acts 109 

Registration  of  bonds • 95~97>  101,  108 

Roads  and  bridges,  county  bonds  for 104 

Savings  banks,  act  of  1887,  unconstitutional 303 

School  bonds,  in  city  of  Chicago 98 

School  bonds  of  school  districts,  how  issued 97 

School  bonds  of  townships,  for  high  school  buildings 98 

Sinking  fund  to  pay  registered  bonds 103 

Special  legislation  prohibited 92 

Tax  limit  for  county  purposes,  additional  authorized  how  ...      93 

Water  supply  pipes,  city,  town  and  village,  bonds  for 95 

Water-works 94~95 

Trust  companies,  deposit  with  state  auditor,  in  what 327 

Implied  power  to  issue  bonds 5,  18,  24 

Implied  power  in  counties,  townships,  etc.,  none 6-7 

Implied  power  in  cities,  review  of  decisions 7-18 

Indebtedness,  in  excess  of  constitutional  limitation,  void  ....    29,  37 
Indebtedness,  municipal,  what  constitutes 29-36 


334  GENERAL    INDEX. 

INDIANA — Bonds  should  be  payable  at  some  bank 89 

City  aid  to  bridge,  road,  railroad  and  water  companies 87 

City  bonds,  in  cities  of  over  15,000  population 84 

City  funding  bonds  in  cities  of  over  16,000  voters 85 

City  funding  bonds  in  cities  of  under  16,000  voters 85-86 

City  bonds  for  water-works 86 

Constitutional  limitations  and  provisions 76-77 

County  bonds  for  public  buildings,  and  funding 77~79 

County  bonds  for  public  roads 34~36,  80-82 

County  bonds  to  purchase  toll  roads 82-84 

County  commissioners  77 

County  funding  bonds  in  counties  of  over  20,000 79 

County,  temporary  loans  by, — limitation 79 

Gas-works,  city  may  construct 87 

Limitation  on  municipal  debts  and  subscriptions 76 

Railroad  aid  bonds,  by  cities,  etc 87-89 

Savings  banks,  investments  by 302-303 

School  bonds  and  school  corporations 88-89 

Tax,  limit  of,  for  county  and  township  purposes 79 

Tax,  limit  of,  for  city  and  school  purposes 85 

Town  bonds  for  public  roads 81-82 

Town  loans,  limitation  on 87 

Township  debts,  how  contracted 86 

Water-works,  city  and  town  bonds  for 86 

Insurance  companies,  investment  by 306-320 

IOWA — Cities  and  towns,  classification  of 142 

City  bonds,  in  anticipation  of  revenues  ..."   * 143 

City  bonds  for  street  improvements 146-148 

City  bonds  for  sewers,  gas-works,  and  electric  light  plant  .    147-149 

City  bonds,  funding  acts  of  1876 — '86 — '88 143-145,  152 

City  bonds  for  water-works,  in  cities  of  second  class 149 

Constitutional  limitations  and  provisions 136 

County  board,  limit  of  expenditures  by 136-137 

County  loans,  funding  bonds 138,  139-141,  152 

Defaulted  bonds  collected  through  state  officers  .    141,  144,  145,  153 

Drainage  bonds,  by  counties 141-142 

Gas-works  and  electric  light  bonds 149 

Limitation  on  municipal  indebtedness 136 

Municipal  aid  to  private  corporations,  etc.,  prohibited 154 

Municipal  loans 136,  143 

Railroad  aid  bonds  illegal 154 

Refunding  bonds  of  counties,  cities  and  towns 152-155 

School  bonds 150-151 


GENERAL   INDEX.  335 

Sectarian  schools,  aid  to  forbidden 154 

Sewerage  bonds  in  cities 147-148 

Towns,  corporate  management — funding  bonds 143,  146 

Water-works,  city  bonds  for 149 

IvANSAS — Auditor  of  State,  registration  of  certain  bonds  by  .   .    211 

Bridges,  city  bonds  for 196,  197,  203,  204,  209,  212 

Cemeteries,  township  bonds  for 204 

Cities  classified 196 

Cities  of  first  class,  bonds  for  what  and  how  issued  ....    196-198 
Cities  of   second  class,    bonds   for  street  and   other  improve- 
ments      198-200,  218 

Cities  of  second  class,  funding  and  refunding  bonds  ....    200-201 

Cities  of  second  class,  limit  of  indebtedness 202 

Cities  of  the  third  class,  refunding  and  funding  bonds  .    .    .    201,  202 
Cities  of  the  third  class,  bonds  for  general  improvements  .    203,  218 

Cities  of  the  third  class,  limit  of  debt,  sinking  fund 203 

Constitutional  limitations  and  provisions 194 

County  commissioners — loans,  how  made 194-195,  218 

County  bonds,  for  fair  grounds 195 

Duplicate  of  lost  bonds,  how  obtained 220 

Fiscal  agency  of  state  in  New  York,  payment  of  bonds  .    .    220-221 

Funding  bonds,  general  acts 212-213 

I/imitations  on  municipal  indebtedness 194,  202,  203 

Manufactories,  bonds  to  aid 21-22,  and  202,  note 

Natural  resources,  bonds  to  encourage 218 

Parks,  city  and  township  bonds  for 196,  204 

Poor,  bonds  to  provide  buildings  for 209 

Railroad  aid  bonds,  redemption  of 216-218,  219 

Railroad  aid  bonds,  funding 200,  201,  212 

Sale  of  bonds,  to  be  first  offered  school  fund  commissioners  .    .    220 

School  district  officers  and  bonds 205-207 

School  bonds  in  cities 207-209 

Special  legislation 39,  194 

Special  acts  for  issue  of  bonds  by  cities,  etc.,  void 39 

Special  acts  for  issue  of  bonds  by  school  districts,  valid  ....      39 

Township  bonds 203,  204,  209,  212,  213,  216,  218 

Water-works,  bonds  for  in  cities 197,  215 

Wrongful  issue  of  certain  bonds,  felony 207,  212 

Jjagrange  manufacturing  aid  bond  case 22 

Law  of  municipal  bonds,  development  and  importance 1-2 

Legislative  control,  as  to  issue  of  bonds 51 


336  GKNERAI,    INDEX. 

Limitations  on  the   issue   of  municipal  bonds   (also  see  under  the 

various  states  and  territories) •'....    28-42 

Limitations  on  municipal  indebtedness 28-37 

Limitations  on  state   indebtedness 36 

Lis  pendens,  doctrine  of,  not  applicable  to  bondholders 57 

Lost  or  stolen  bonds,  purchaser  of,  usually  takes  good  title  ....      57 

_M_AINE — Insurance  companies,  investments  by 306 

Mortgage  Loan  and  Investment  companies 321 

Savings  banks,  investments  by 286-288 

Majority,  rule  as  to  determining 44 

Mandamus,  the  usual  remedy  to  enforce  payment  of  bonds  ....      58 

Manufacturing,  bonds  to  aid,  invalid 21-22 

MASSACHUSETTS — Insurance  companies,  investments  by  .    306-308 

Savings  banks,  investments  by 291-294 

MICHIGAN  —  City    bonds    for    public    buildings    and    improve- 
ments       111-113 

City  funding  bonds 113 

City  loans  to  anticipate  special  assessments 112 

Constitutional  limitations  and  provisions no 

County  board,  organization  and  meetings iio-in 

County  loans,  how  and  for  what  made — limitation iio-in 

Insurance  companies,  investments  by 319 

Savings  banks,  investments  by 304 

School  bonds,  for  what  and  how  issued 116-117 

Tax  limit  in  cities  and  counties 110-112 

Township  bonds,  how  and  for  what  issued 114 

Village  government  and  loans 113-114 

Water- works,  bonds  for  by  cities  and  villages 114-115 

MINNESOTA — Bonds  for  pviblic  buildings  in  cities,  villages,  etc.  .    135 

City  funding  bonds 129 

Constitutional  limitations  and  provisions 127 

County  board — county  bonds,  for  what  and  how  issued  128,  133,  134 

Limit  of  municipal  aid  to  railroads 127 

Railroad  aid  bonds 128-129,  I33~I34 

School  bonds  and  school  districts 130-133 

Steam  traction  road  bonds  by  counties 128-129 

Town  bonds,  how  issued 130 

MISSOURI — Cancellation  of  paid  bonds 193 

Cities,  classification  of 186 

Cities  of  the  first  class  (St.  Louis),  bonds,  how  issued 186 

Cities  of  the  first  class,  bonds  not  required  to  be  registered  .  .  192 
Cities  of  the  second  class,  bonds  for  city  improvements,  etc.,  186-188 
Cities  of  the  third  class,  bonds  of,  for  what,  and  how  issued,  188-186 


GENERAL   INDEX.  337 

Cities  of  the  fourth  class,  bonds  of,  for  what,  and  how  issued  .    .    189 

City  funding  and  refunding  bonds 1 86,  1 88,  189,  190 

Compromise  bonds  for  railroad  aid  debts 190 

Constitutional  limitations  and  provisions 180-182 

County  bonds,  for  what  and  how  issued 183-185 

County  funding  and  refunding  bonds 185,  190,  195 

County  government  vested  in  county  court 183 

Court  house  bonds  issued  by  counties 183,  192 

Funding  bonds 190-191 

Limitation  on  state  and  municipal  debts,  etc 180-182 

Registration  of  bonds  by  the  state  auditor 192 

School  bonds,  for  what  and  how  issued 189 

State  funding  bonds 182 

Town  bonds  for  funding  and  compromising  debts 190 

Village  government  and  loans 189 

Water-works,  city  and  village  bonds   for 188-189 

MONTANA — Cities  and  towns  classified 274 

City  and  town  bonds 274-275 

County  board — bonds  for  public  buildings  and  funding  .    .    272-274 

I/imitation  on  municipal  indebtedness  four  per  cent 265,  274 

School  district  bonds,  how  issued 275-276 

Municipal  bonds — defined — amount I 

execution  of 45,  49 

form  of 45-47 

"  "          in  excess  of  constitutional  limit,  void 29,  37 

issued  to  pay  judgments,  effect  of 37 

' '  number  of,  not  a  material  part 47 

place  of  payment 48 

power  to  issue 5-18 

purposes  for  which  may  be  issued 19-27 

purpose  must  be  public 19 

registration  by  state  auditor 50-51 

signature  to 48 

the  issue  of 40-52 

the  law  of 1-4 

Municipal  corporations — purpose  of 5 

Municipal  classification  in  Ohio  and  other  states 40-41 

Municipal  decision  by  authorized  officers  in  the  issue  of  bonds  ...      54 

Municipal  estoppel  by  recitals  in  bonds 53-56 

Municipal  officers,  who  must  act  in  the  issue  of  bonds 45 

Municipal  subscriptions  and  donations,  limitations  on 41 

Municipal  warrants,  orders,  drafts,  etc 14-15 


338  GEN  KRAI,    INDEX. 

IVEBRASKA— Bridges,  highways,  etc.,  bonds  for 173 

Cities   classified 160 

Cities  of  first  class,  bonds  for  funding 163,  174 

Cities  of  first  class,  bonds  for  public  buildings,  bridges,  etc.  .     163 
Cities  of  first  class,  bonds  for  street  improvements,  sewers  and  . 

water-works 163-164 

Cities  of  second  class,  bonds  for  funding 164,  165,  174 

Cities  of  second  class,  bonds  of,  must  be  registered 177 

Cities  of  second  class,  of  over  5,000,  funding  bonds  ....    166,  174 
Cities  of   second  class,  bonds  for  street  improvements,  sewers, 

water-works,  etc 165-166 

Cities   of   metropolitan   class,   bonds  for  street  improvements, 

etc 160-162 

Coal  prospecting  bonds  by  counties 159 

Constitutional  limitations  and  provisions 155-156 

County  board,  how  composed,  meetings 156-157 

County  bonds  for  buildings,  funding  and  refunding  .    .     157-158,  174 

Courthouse,  jail,  etc.,  bonds  for •    • 173 

Fiscal  agency  of  state  in  New  York 173 

Internal  improvement  bonds  of  counties  and  cities 171 

Internal  improvement  bonds  of  precincts,  villages,  etc 173 

Internal   improvement  bonds,  refunding 172 

Limit  on  county  and  municipal  aid  to  railroads 155-156 

Limit  on  taxation  for  county  purposes 156 

Railroad  aid  bonds 155,  171-173 

Registration  of  county  bonds 158,  176 

Registration  of  city  and  village  bonds 174,  177 

Registration  of  precinct  bonds 174,  178,  179 

Registration  of  school  bonds 168 

School   district  bonds 167-169 

School  bonds  in  cities 169-171 

Special   legislation 38-39,  156 

Submission  of  questions  to  vote  of  county 159 

Village  bonds 165,  173,  174 

Water-works  bonds 163,  165,  166 

Negotiability  of  municipal  bonds 53 

NEVADA — Constitutional  limitations  and  provisions 245 

County  board,  organization  and  meetings 246 

Municipal  bonds,  usually  issued  under  special  acts 246 

NEW  HAMPSHIRE— Guardians,  investments  by 321 

Savings  banks,  investments  by 288 

NEW  JERSEY — Banks,  deposits  to  secure  circulation,  in  what  .    325 
Guardians,  executors,  etc.,  investments  by 324 


GENERAL    INDEX.  339 

Insurance   companies,  investments  by 313-314 

Savings  banks,  investments  by '  .    .    .    .    299-300 

NEW  MEXICO— Cities   and   towns  classified 267 

City  and  town  bonds,  for  what  and  how  issued 267-268 

Federal  limitations  as  to  municipal  indebtedness,  etc.  .    .    .    264-265 

Laws  of,  must  be  submitted  to  Congress 265 

Railroad  aid  bonds  by  counties 266 

Water-works  in  cities  and  towns 268 

NEW  YORK — Banks  may  purchase  certain  municipal  obligations  .  324 

Corporations  (except  savings  banks),  investments  by 323 

Credit  guarantee  and  indemnity  companies,  investments  by  .  .  324 
Deposits  with  state  insurance  department,  in  what  made  .  ...  313 

Fire  insurance  companies,  investments  by 310-311 

Insurance  companies,  investments  by 310-313 

Life  insurance  companies,  investments  by 310-311 

Marine  insurance  companies,  investments  by 312 

Savings  banks,  investments  by 297-298 

Title  and  bond  and  mortgage  guarantee  companies 324 

Trust  companies,  investments  by 310,  323 

Number  of  bond  not  a  material  part 47 

Officers,  execution  of  municipal  bonds  by 45 

OHIO — Bonds,  how  advertised  and  sold 74 

Cities  and  villages,  classification  of 4i(67 

City  bonds,  for  what  and  how  issued 68-7 1 

City  bonds,  exchange  of  coupon  for  registered 69 

City  bonds  for  turnpike  roads 66-67 

City  bonds  refunding  by  fund  commmissioners 70 

Constitutional  limitations  and  provisions 62 

County  board  and  bonds  for  public  buildings,  relief  of  poor,  etc.  63 
County  bonds  for  children's  home,  joint  workhouse,  and  ditches.  64 
County  bonds  to  purchase  toll  bridges  and  toll  roads  ....  64-65 

County  bonds  for  turnpike  roads 66-67 

Guardians,  investments  by 325 

Insurance  companies,  investments  by 316-318 

Safe  deposit  and  trust  companies,  investments  by 326 

Sale  of  bonds,  how  made 74 

Savings  and  loan  associations,  investments  by 301-302 

School  bonds,  how  issued 72-74 

Special  acts  for  the  issue  of  bonds 40,  62,  74-75 

Township  bonds 71-72 

Village  bonds 66,  68-71,72 

OREGON — Bonds  usually  issued  under  special  acts  or  charters  .    .    245 


34°  GENERAL    INDEX. 

Constitutional  limitations  and  provisions 244-245 

Ottawa  bond  cases 22-24 

Over  issue  of  bonds,  effect  of —j 

PACIFIC  STATES,  bond  laws  of,  see  Chapter  XX  ....     239-246 

Payee  in  blank,  payable  to  bearer 47 

Payment,  place  of 48 

Payment  of  bonds,  enforcement  of ^8 

PENNSYLVANIA  — Guardians,  executors,  etc.,  investments  by  .    325 

Insurance  companies,  investments  by 314-316 

Savings  banks,  investments  by 300 

Power  of  public  or  municipal  corporations  to  issue  bonds  ....    5-18 

Private  purposes,  bonds  cannot  be  issued  for 19 

Private  purposes,  decisions  illustrating 21-25 

Public  purposes  illustrated 19,27 

Purposes  for  which  municipal  bonds  may  be  issued 19-27 

Purpose,  how  determined, —  a  question  for  judicial  decision  .    .    .    26-27 

JXailroad   aid    bonds 2,  19-21 

Regularity  of  proceedings  in  issue  of  bonds — record  to  be  kept  .    43,  328 
Recitals  in  bonds,  effect  of  as  against  the  municipality  ....    53-57 

Recitals  in  bonds,  as  to  what  facts  conclusive 53~55 

Recitals  in  bonds,  as  to  amount  which  may  be  issiied 55 

Recitals  in  bonds,  will  not  cure  want  of  power 56-57 

Registration  of  bonds  by  state  auditor,  efiect  of 50-51 

Remedies  of  bondholders  cannot  be  repealed 59~6o 

RHODE    ISLAND — Guardians,  investments  by 322 

Insurance  companies,  iuvestments  by 309 

Savings  banks,  investments  by 295 

Rights  and  remedies  of  municipal  bondholders 53~6o 

Savings  banks,  investments  by 286-305 

Seal,  should  be  affixed  to  munipipal  bonds 49 

Seal  not  essential  to  validity  of  municipal  obligations 49 

Signatures  to  bonds,  what  constitutes 48 

Signatures  to  coupons  may  be  engraved,  stamped,  etc 48 

Special  acts,  issue  of  bonds  under,  in  Nebraska,  Kansas,  etc.  .    .    .    38-41 

Special  assessment  bonds 32-36 

Special  assessment  bonds,  municipality  issuing  usually  liable    .    .    32-36 

Special  assessment  bonds,  Ohio  and  Kansas  cases 32-34 

Special  assessment  bonds,  Indiana  cases,  contra 34~36 

Special  legislation,  constitutional  provisions  considered  .    .    .    38,  41,  42 
Special  legislation,  Nebraska,  Kansas  and  Ohio  cases  ....    38,  41,  42 


GENERAL    INDEX.  341 

State  indebtedness,  limitation  on 36 

Suggestions  to  municipalities  as  to  issue  of  bonds 328-330 

_L  axes  to  pay  bonds,  right  to  levy  accompanies  power  to  issue  ...      59 

Taxation  can  only  be  exercised  for  a  public  purpose 19,  26 

Tax  laws  irrepealable  as  to  outstanding  bonds 59~6o 

TERRITORIES— for  bond  laws  see  chapters  XXI— XXII  .    .    247-284 
Federal  limitation  as  to  municipal  indebtedness,  etc.     .    .    .    264-265 

Federal  limitation  as  to  special  legislation 265 

Laws  of,  except  Dakota,  Idaho,  Montana  and  Wyoming,  must  be 

submitted  to  Congress 265 

TEXA    — City  bonds,  for  what  issued 228,  229,  230,  231 

Compromise  bonds  of  counties,  cities  and  towns 230-231 

Constitutional  limitations  and  provisions 226-227 

County  government  under  commissioners'  court  ....     •  .    .    227 

County  bonds  for  bridges,  courthouse  and  jail 227 

County  funding  bonds 228,  230 

Town  bonds  for  funding,  etc 230-231 

Trust  companies,  investments  by 321-327 

U  •  S.  Supreme  court,  in  law  of  municipal  bonds 3 

As  to  implied  power  of  counties,  etc.,  to  issue  bonds 6-7 

As  to  implied  power  of  cities  to  issue  bonds 14-17 

UTAH — County  affairs  managed  by  county  court 280 

County  indebtedness,  limit  on 264,  280 

Federal  limitations  on  municipal  indebtedness,  etc  ....  264-265 
Laws  of,  must  be  submitted  to  Congress 265 

VERMONT — Savings  bank  and  trust  company  investments    .    288-291 

(But  see  amendments  page  330.} 
Investment  of  trust  estates 321 

\\arrants,  municipal,  legal  characteristics  of 14-15 

WASHINGTON   TERRITORY— Cities  under  special  charters  .    284 

County  government— issue  of  bonds 284 

Water- works,  contract  to  pay  for  in  annual  installments 30-31 

WISCONSIN — Bonds,  how  authorized  and  issued 125-126 

Bonds  for  bridges • 122-123 

City  and  village  bonds 119-120 

Constitutional  limitations  and  provisions 118 

County  board  of  supervisors 118 

County  bonds,  for  what;  and  how  issued 120,  122,  123 

Insurance  companies,  investments  by 320 

Limitation  on  municipal  indebtedness 118 

Limitation  of  actions  on  bonds 126 


342  GENERAL   INDEX. 

Railroad  aid  bonds 123-125 

Refunding  bonds  generally 122 

Savings  banks,  investments  by 305 

School  districts, — loans  by 121 

Town  board,  issue  of  bonds 120 

Trust  companies,  capital  stock  of,  how  invested 327 

WYOMING— City  and  town  bonds 279 

County  board, — funding  bonds 277-278 

Federal  limitation  on  municipal  indebtedness 264-265 

Railroad  aid  bonds  by  counties 278 

School  districts,  and  school  district  bonds 279-280 


S.  A.  KEAN  &  CO.'S 


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04- 


s.  A.  KEAN  &  co.'s 

L/WV  OFJVIUjMICIPy\L  BO^DS, 

INCLUDING  A 

DIGEST  OF  LAWS    RELATING  TO  THEIR  ISSUE, 
To  which  is  added  a 

Digest    of    Statutory     Laws    goverqiqg     INVESTMENTS     by    Savings    Baqks, 

Iqsuraqce  Conqpanies,    Guardiaqs,   Executors,  aqd  other 

Corporations  and  Trustees. 


J.  A.  BURHANS,  OF  THE  CHICAGO  BAR. 


S.  A.  KEAN    &•  CO.'S 

Bond  Values  and  Interest  Tables. 


Our  Bond  Tables  were  prepared  expressly  for  us  by  JOSKl'H  DKGHUEE,  of 
New  York,  and  we  believe  that  they  are  the  most  comprehensive  and  practical  tables 
now  extant. 

The  Interest  Tables  were  prepared  for  us  by  Mr.  H.  C.  CHADWICK,  of  this  city, 
after  a  method  devised  by  himself,  who  claims  for  them  brevity,  accuracy  and  conven- 
ience, and  we  believe  our  friends  will  find  them  valuable  and  more  comprehensive 
than  any  other  in  existence. 


PRICES: 

Law  of  Municipal  Bonds, Leather,  $3.00;  Cloth,  $2.50 

Bond  Values  and  Interest  Tables "          2.00  ;      "         1.50 

Both  above  books  bound  together "          4.00;      "        3.00 


S.  A.  KEAN.  JOHN  PARSON 

Banking  ^ouse  of 

S.  H.  Ikean  &  Company, 

100  ftkstyngton  Strwt, 


ESTABLISHED    186O. 


NEW  YORK:    BOREEL  BUILDING,  IIS  BROADWAY. 


Q0an8in<j  Qfccounte, 

CAREFUL  attention  given  to  the  accounts  of  out  of 
town  Banks  and  Bankers,  to  whom  we  allow  interest  on 
daily  balances. 

We  credit  time  and  sight  items  on  Chicago  and  other 
points,  discount  business  paper,  and  make  telegraphic  and 
cable  transfers. 

We  also  receive  the  accounts  of  merchants,  individuals 
and  others, 

Collections. 

Our  extensive  connections  enable  us  to  make  collec- 
tions, including  dividends  and  coupons,  on  exceptionally 
favorable  terms,  Send  for  par  list, 

.foreign  tetyange 

on  the  larger  cities  of  Europe  bought  and  sold. 
Letters  of  Credit  for  travelers, 


WE  BUY,  SELL  AND  EXCHANGE 


unicipaf 


AND 


ALSO  LEADING 

•R  R  Bonfo? 

AND  OTHER  CONSERVATIVE  SECURITIES. 
SEND  FOR  LIST. 


WE  DEAL  IN 


Banb  TUarrante  anb 

Which[  caq  be  applied  iq  the  locatioq  of  Government  land, 


Iq  additioq  to  regular  discounts  for  those  keeping  ac- 
counts wit^  us,  we  also  deal  iq 


made  for  actual  transactions  iq  the  purchase  and  sale  of 
goods. 

Double  and  single  name  paper,  and  paper  secured  by 
collaterals. 

Ask  for  weekly  offerings,  if  desired. 


CAPITAL    $150.OOO  C.  C.  CHENEY,  President. 

C.  A.  CHAPMAN,   Treasurer. 
Incorporated  1864.  C.  HKINEMAN,  Secretary. 

WESTERN 

BANK  NOTE  COMPANY 

NEW  LOCATION, 
298-306    DEARBORN    STREET, 

CHICAGO. 

ENGRAVERS  AND  PRINTERS  OF  ALL  CLASSES  OF 
COMMERCIAL    WORK. 

STEEL  PLATE  #  LITH9GRAPHY 


DRAFTS, 
CHECKS, 
LETTERS. 


ONDS 


/^          CERTIFICATES 


OF 

STOCK, 

DIPLOMAS. 


GEO.  E.  COLE.  W.  D.  COOPER. 

GEO.  E.  COLE  &  CO., 

Stationers  and  Printers, 

Solicit    an    opportunity   to    quote    you 

prices  on  anything  you  need 

in  our  line. 

86    AND    88    DEARBORN    ST., 

CHICAGO. 


A.  C.  M'CLURG  &  CO., 

Stationers  and  Engravers. 

LETTER-HEADS,  CHECKS,  NOTES, 

BUSINESS  CARDS,          DRAFTS,  BONDS, 

MENUS,  INVITATIONS,  Etc., 
for  Reunions  and  Receptions,  ele- 
gantly engraved  or  lithographed. 

ORIGINAL  DESIGNS  WITH    ESTIMATES  WILL 

BE  FURNISHED  ON   APPLICATION. 

WABASH  AVENUE  and  MADISON  STREET, 

Chicago. 


B.    F.    JACOBS, 
REAL   ESTATE    AND    LOANS, 

99  Washington  St.,  CHICAGO. 

Attention  is  invited  to  the  following  subdivisions  : 

THE    HON.  L.  P.  MORTON'S   DOUGLAS    PARK   SUBDIVISION— 

Lots  on  Douglas  Park,  California-av.,  and  Twenty-second-st. 
CHICAGO    UNIVERSITY    SUBDIVISION—  Ashland  av.,    Paulina-st., 

Wood-st.,  Lincoln  St.,  Robey-st,  and  Forty-seventh  to  Fifty-first-£t. 
SCOBEY    &     SHONTS'     SUBDIVISION—  Sixty-second,     Sixty  third, 

Loomis  and  Laflin-sts. 
B.  F.  JACOBS'  EVERGREEN  PARK  SUBDIVISION—  Ninety-first  to 

Ninety-fifth-st.  and  Johnson-av. 
REYNOLDS'    SUBDIVISION—  Morgan   Park,    io5th  to   loyth-st.   and 

Western-av. 
OUR  SUBDIVISIONS—  South  Park,  Calumet,  Michigan  and  Wabash-avs. 

and  82d  and  Ssth-sts. 
ACRE  TRACTS  —  Containing  from  five  to  one  hundred  and  sixty  acres, 

in  and  near  the  city,  ready  for  subdividing. 


ou  wish  to  sell  or  buy  properly  in  Chicago  or  Cook  County, 
or  make  inquiries  concerning  property,  loans  or  taxes,  I  shall  be 
pleased  to  hear  from  you,  A  small  map  of  the  city  and  suburbs  mailed 
free  if  requested. 


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